While, indeed, the AGI technique was a Z-buffer, the methodology used for it was completely unlike that used in other algorithms.
They used the 16-colors of the display to create viewable depth-maps. Here's how it worked. You started with a scene image, which was normally colored as you wanted it to appear. Then you had a special program which you loaded with - and repainted it using the 16-color pallet. The Y-Axis was divided into 16 stripes (this was 320x200 days so minus the status bar and menu bar each stripe was around 11pixels high (for a total display height of about 180 pixels).
The player's Z-axes was determined based on which 11-pixel strip his feet was in (same for any other interactive objects or characters). So 16 possible depths, and 16-colors in the map-image. The map was never shown to the player, but as the player moved around the scene, it was used in the movement/collision calculator. as you moved it checked the pixels which pixels of the map overlapped the coordinates of the player sprite (the full rectangle). Say you were in the center stripe (depth 8). If the pixel had a color of 7 or lower, it was drawn OVER your character, 9 or higher and your character was drawn over the pixel (things that were behind you). If it was 8 you would collide against it and be shifted back until the rectangle no longer overlapped - bumping against the wall effect.
This particular way of doing a Z-buffer was pretty unique to Sierra because it fundamentally relied on the specific hardware abilities/limitations of the PC platform at that time. You could conceivably use the same approach today and get extremely fine-grained control over depth due to how many colors we have -but there are far easier ways to do that (like simply storing the Z-coordinate for each pixel in an object before you render it). More-over when it came out - it was the first system ever developed which allowed the player in games to move in front or behind objects. I'm happy to believe you that there were Z-buffer tech that predated Sierra and even PC's - but interactive Z-buffer matched collision control in a game was Sierra's great breakthrough. It was first used in the original Kings Quest - and that was such a massive success that they created an entire generation of games on the AGI engine.
There's still a lively community of enthusiasts developing AGI games using modern-day remakes of the engine (which also allows playing the original Sierra games on modern systems). ScummVM includes an AGI interpreter though they lifted the code directly from Sarien.
Sierra abandoned AGI by the early 1990s to make way for a new engine with new abilities that would be drive their next generation of games and be able to make use of SVGA technologies. This was the much-loved SCI engine - which was ScummVM's original focus - and the base of such important historical games as Phantasmagoria. SCI created a whole new generation of amazing games but it was also the beginning of the end of Sierra's reign. Ken and Barbara's little home business had grown big and corporate and they were also now facing some serious competition in the adventure game genre from the likes of LucasArts which had famous IP's like Indiana Jones to work with, and a massive budget.
The company in 1995 was perhaps the single most successful gaming company in the world. Within ten years they would be defunkt, bankrupt and finally bought out by ActiVision.
That sad history aside though - there is no doubt that Ken and Barbara were among the most important pioneers in gaming history - above all they deserve credit for a key realization: that the best games combined great storytelling with the best experience the technology you can do.
Barbara had, had the idea for the company after loving text-adventure games - and realizing how much fun they would be with pictures. Ken, the programmer, worked to create those - but she remembered why the games were good even BEFORE they had graphics: great stories.
Kings Quest was a technological marvel - but it also had a really fun story. That remains the dual-pillars of the best games to this day - and marked the transition from "space invaders" style games which were storyless button-mashers to games-as-art.