cmwetherell So the idea behind it is that your username (what you register with) might be "testuser" but the nickname you (or an admin sets) might be something like "Benutzer testen" the nickname will also support UTF-8 like "测试用户" these names will be searchable, and usable, but extensions like mentions will use the latin character set username for processing.
This is essentially the same way that twitter does things, the username must be in the latin character set, but the display name people really see can be basically anything.