I mean sure, 10+ years ago they would have used plain ascii domain names, but nowadays they should be free to user their own language and script. At least two thirds of the world population and internet users does not use latin script.
Localized scripts are exclusionary to everyone else who has no hope of typing them or even identifying them in a unicode table to copy and paste.
A funny situation happens in China where even the most computer illiterate old person can type latin letters on a PC with enough patience just by matching appearance to their keyboard, but many old people are utterly blocked from typing Chinese characters because that requires learning a special input method which is almost a whole nother language itself. Before smartphones, they had to write them with a stylus on a writing tablet to get around this problem.
Half the English alphabet is excluded from domain names too. When are we getting capital letters? Let's just tolerate never having them and not worry, same as those other languages' odd letters. ExpertSexChange.com and PenisLand.net could use them.
It's the other way around, not supporting other letters is excluding everyone else because essentially only English doesn't have diacritics.
"Año" and "ano" are not the same word, degrading to ascii only is not an acceptable solution. Imagine for example that the letters 'd', 'q' and 'w', weren't availabe in domain names for some reason and you had to use alternatives. That's how it feels.
But if ñ is so important, then so are capital letters because "Olive" is a person and "olive" is a fruit. Imagine typing English without capital letters.