That whole feature is kind of paragraph 22. No legit/popular site uses it so users don't expect national characters in domain names, so no one actually hosts sites using "xn-" domains.

Kind of an interesting history to this kind of url: https://www.nic.ad.jp/ja/dom/idn.html

Shrug. First time I'd seen this. If it displayed as the original text it would have been clearer.