Yeah, that's definitely a sponge. Most sponges are completely harmless/beneficial, but some can be invasive and/or harmful to corals (thankfully, these are rare).
To tell if a sponge is chemically harmful: if a healthy, established coral starts closing up or looking to be in bad shape on the side closest to the sponge as the sponge grows closer to it, and nothing else has happened (lighting changes, parameter swings, pests, etc.) that could explain it, then the sponge is probably chemically harmful.
Chemically harmful sponges are very rare.
For invasive sponges: unless it shows signs of being chemically harmful or starts actively growing over and smothering a coral's flesh/polyps, it's harmless. These can grow over the skeletons of corals, around the base/stalks of corals, even up into the water column above corals (where they're over the coral but not growing on the flesh or polyps themselves), etc. without harming the coral at all - as long as the coral flesh and polyps can get food, light, and flow, the sponge is harmless.
Invasive sponges are moderately rare.
Invasive and chemically harmful sponges are incredibly rare.
My one spot fox face actually gets in there and nibbles on the sponge all the time.. it’s strange!
