No, this is not removed, it is there available in RHEL7 as well:

Ansible>yum search Xephyr
========================================================================= N/S matched: Xephyr ==========================================================================
xorg-x11-server-Xephyr.x86_64 : A nested server.

  Name and summary matches only, use "search all" for everything.
Ansible>yum info xorg-x11-server-Xephyr.x86_64
Available Packages
Name        : xorg-x11-server-Xephyr
Arch        : x86_64
Version     : 1.15.0
Release     : 32.el7
Size        : 915 k
Repo        : RHEL7-server
Summary     : A nested server.
URL         : http://www.x.org
License     : MIT
Description : Xephyr is an X server which has been implemented as an ordinary
            : X application.  It runs in a window just like other X applications,
            : but it is an X server itself in which you can run other software.  It
            : is a very useful tool for developers who wish to test their
            : applications without running them on their real X server.  Unlike
            : Xnest, Xephyr renders to an X image rather than relaying the
            : X protocol, and therefore supports the newer X extensions like
            : Render and Composite.

This package is available under 'rhel-7-server-rpms' and 'rhel-7-server-eus-rpms' repo channels for download. https://access.redhat.com/downloads/content/xorg-x11-server-Xephyr/1.19.3-11.el7/x86_64/fd431d51/package