Yes, it is also a comment. And the contents of that comment carry special meaning if located at the top of the file, in the first two lines.
From the Encoding declarations documentation:
If a comment in the first or second line of the Python script matches the regular expression
coding[=:]\s*([-\w.]+), this comment is processed as an encoding declaration; the first group of this expression names the encoding of the source code file. The encoding declaration must appear on a line of its own. If it is the second line, the first line must also be a comment-only line.
Note that it doesn’t matter what codec should be used to read the file, as far as comments are concerned. Python would normally ignore everything after the # token, and in all accepted source code codecs the #, encoding declaration and line separator characters are encoded exactly the same as they are all supersets of ASCII. So all the parser has to do is read one line, scan for the special text in the comment, read another if needed, scan for the comment, then configure the parser to read data according to the given codec.
Given that the comment is required to be either the first or second in the file (and if it is the second line, the first line must be a comment too), this is entirely safe, as the configured codec can only make a difference to non-comment lines anyway.