The French domain name registry AFNIC has published a PDF explaining why it will soon support internationalized domain names (IDNs). According to AFNIC:
As of July 3, 2012, it will be possible for anyone to register domain names under the .fr, .yt, .pm, .wf, .tf, and .re TLDs with new characters such as é, ç or the German Eszett.
Consider the website for France’s presidential palace. Right now, you would get to this website via www.Elysee.fr, rather than its actual name www.Élysée.fr.
Now I realize there is a lot of extra money to be made by registrars if every company, government agency, and organization registers a bunch of extra domain names, differentiated only by an accented character or two. And some might argue that IDNs amount to little more than a boondoggle for registrars.
I would argue that the new (corporate) generic TLDs are the real boondoggle. I mean, does the Internet really need .honda or .disney top level domains?
IDNs support languages, plain and simple. Which has been a very long time coming. And which is ultimately about showing respect not just for languages but the people who use them.