If you remember what was the encodings situation before UTF-8 became the norm... Let's say it was really ugly. E.g. there were at least two popular encodings for Russian Cyrillic letters — CP1251 and KOI8-R, and it was _very_ common for applications getting it wrong. Restricting things like passwords (and ideally even file names) to ASCII this was a practical necessity rather than an inconvenience.

To avoid apple inevitably fucking up and breaking things like in this case. The risk to benefit ratio for allowing this is just very poor