Because fuck those people who want to use non-English names, amirite?
Seriously, it's 2022, we have better solutions than ASCII by now. And for what it's worthful, even in ASCII some chars like l, I and 1 are quite confusable.
DNS support is no where near Unicode. At best we get local language support for non-ASCII domains, but everyone else will see it as punycode. Of course, phishing is one good reason why it's this.
> Internationalized domain names are stored in the Domain Name System (DNS) as ASCII strings using Punycode transcription.
Seriously, it's 2022, we have better solutions than ASCII by now. And for what it's worthful, even in ASCII some chars like l, I and 1 are quite confusable.