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I have several tens of gigabytes of iPhone and iPad apps inside my ~/Music/iTunes/Mobile Applications directory. What happens to the .ipa files in this directory after updating to iTunes 12.7? Are the contents of this directory still updated after a Sync is performed with an iOS device that has new or updated apps installed? Or does this directory just become wasted storage that should be cleaned up?

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Those no longer sync with iTunes so you can indeed delete them...

however

If there is a 64bit orphaned or abandoned app that you still use or need that is no longer in the app store. Don't toss it as iTunes manual install (still supported) is the only way you'll ever be able to re-install it if you wipe your phone or move to a new one.

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As @SteveChambers mentioned above, you can delete the .ipa files.

Per MacWorld:

The App Store in iTunes is kaput and there’s nothing you can do about, so dry your tears and let’s move on. Apple doesn’t let it go neatly out the door, however. After updating, I found that 5GB of “.ipa” files—the file format for apps—remained in my home directory (in ~/Music/iTunes Library/Mobile Applications/). You can throw those away unless you’re nostalgic.

The .ipa files aren't removed after the iTunes 12.7 update, but there's no real use for these files any more unless you manually transfer the files to your device.

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