Yes, gitea (and originally gogs) are released under permissive licenses, so it's legally allowed to fork them.
But forking complete working projects with years of work, rebranding with a "good guys" attitude, and progressively erasing the name/history (mentioning a gitea fork has moved down the faq now) is not fair.
Edit: even worse, the word "fork" is not in the FAQ. It is "Comparison with Gitea" now (fork is mentioned on that page).