It's not that they reduce sensation, but are genuinely uncomfortable and your glans is capable of discerning the difference in texture.
The Implanon® contraceptive implant is so reliable as a form of contraception (except for women taking anti-epileptic medication, sometimes also used for manic/ depressive illness) that it does make condoms unnecessary for contraception and it is of course, easily and reliably verifiable - it would be most bizarre indeed to have an implant in that location which was not actually an active Implanon® implant (but nothing is impossible).
Now of course, the other function of condoms, is to reduce (albeit not eliminate) the sharing of Sexually Transmitted Infections including (in approximate order) HPV (Human Papillomavirus), Chlamydia and Genital Herpes; all of which are carried over long periods of time mostly without symptoms and the presence of which cannot be excluded by pathology testing which is to say that while a positive test result is a good indicator of the presence of the infection and the need for such treatment as there might be for the particular disease, a negative test result has absolutely no meaning.
If you can be assured that neither yourself or the girlfriend has had any previous sexual contacts ever, then you may dispense with condoms on this account; otherwise it is your responsibility to use them consistently - which means that the condom is applied before any sort of penetration and removed after its completion, not merely to protect yourselves, but any future partners as well. (It unfortunately follows that having had previous partners implies such an expectation.)
Now as to Candida - yeast or "Thrush" infection - the basic fact is that this is the most common cause of balano-posthitis (kudos to the doctor) and the sort of irritation - usually indicated by inflammation (redness) or itch - which leads to tightening of a previously normal foreskin. There are indeed two variations of foreskin tightness or "phimosis"; developmental where the foreskin has never retracted, and "secondary" to some skin disease. If it tightened, then arguably there is or was some skin disease, and Candida becomes the prime candidate. Whether or not she had symptoms, your girlfriend would be a likely source for persistent infection, so she should be treated (not with Daktacort, but the anti-Candidal component only) if you are going to treat it, as you probably should do whilst pursuing the stretching.
Candida is most certainly sexually transmitted, but not an STI as such because this is by no means the only way it spreads. You simply do have to presume that it will be automatically shared by intercourse or similar - even with condom use!