I would call this actually ignorance. There are other languages then english. Other languages have (even with the roman alphabet) have special characters that are not supported without punycode. For example âäàáßœöō. Workaround exists for a lot of those but without punycode you would be leftout when younhave on of those character ind you name,cityname,companyname.
Punycode has is problems in the URL and if jt is just the point that not every piece of software understands it but it allows for more domain names to choose from when youn have a special character in you family name.