Sorry for my confusion if this answer is stated and I am missing it. I know that IP is added to ambient pressure but I thought that the 2nd stage brings the IP down to ambient pressure. So is gas being delivered to the diver's mouth at ambient pressure or IP plus ambient?
Air is delivered to the diver at ambient pressure. The IP is some pressure above ambient (between around 120 to 150 psi above ambient).
The second stage demand valve has a very flexible diaphragm that will open the demand valve when the diver pulls just the slightest suction below ambient. The suction required to deliver air is around 1 inch of water column (1 in WC = 0.036 psi). Therefore the diver will receive air very close to ambient pressure. So close that it is more convenient to measure it in inches of Water column than psi.