They are a clear playoff team without Davis, but won't be competing for the title as they don't have enough other real talent on that team. While they have some solid depth and nice players i.e. Schroder, Harrell, Gasol, Kuzma, KCP, Caruso, Matthews, etc. there just isn't enough talent there to be anything more than a good team. Just not enough talent outside of Lebron without Davis. Schroder as your 2nd best player = blah, Schroder as your 3rd best player with arguably 2 top 5 players = plenty good enough to win. They'd be even worse with Davis and without James though. Lebron is still the key guy, but he can't carry that team to anything more than probably the 2nd round (perhaps WCF with the right match-ups or maybe even a 1st round loss if they get the wrong match-up).
It will be interesting to see how the seeding shakes out. I mean if you look at current seeding, you would almost rather be 4 than 3 (and 2 would be awful as you meet Denver in round 1 assuming denver would win the play-in game). Lots of time left, but the West could have some interesting seeding and teams jockeying for position could definitely be weird.