The C-API generates code for all signals, not just test points. The reason you are seeing new signals appear is because when the subsystem is made atomic, some signals that were previously virtual become non-virtual and thus show up in the C-API. For more information on Virtual signals, please review the following documentation page: https://www.mathworks.com/help/simulink/ug/signal-types.html
However, these signals will not appear when generating code using Embedded Coder as it employs optimizations not available in Simulink Coder to make the generated code more efficient. Consider using Embedded Coder if the aim is to eliminate these extraneous signals.
