Mark sold his likeness to Disney early last year. Specifically the rights to his digital image and face. They can do what they want with him without his further involvement. That's all lock stock and barrel and a done deal. The sale means they can either do a full digital recreation of Luke, or they can use another actor and use technology to create Mark Hamil's likeness on another actors face.
Around the same time, during pre-production S2, were rumors that Disney was exploring a potential de-aging for Mandalorian.
Whether they went through with it remains to be seen. But that's a fact that likeness sale, de-aging rumor, and S2 were all mentioned within the same week. It may have just been an idea they floated and Lucas Film wanted to get him under contract regardless. But the timing of it says they seriously investigated this possibility. If Hamill shows up, you all might be surprised, but I won't be.