There are two parts to this, but they both amount to "yes".
With IDNA, it is possible to register domain names using the full Unicode repertoire (with a few minor twists to prevent ambiguities and abuse).
The path part is not strictly regulated, but it's possible to encode arbitrary strings in the path. The browser could opt to display a human-readable rendering rather than an encoded path. However, this requires heuristics, as there is no way to specify the character set and encoding of the path.
So, http://xn--msic-0ra.example/mot%C3%B6rhead is a (fictional example, not entirely correct) computer-readable encoded URL which could be displayed to the user as http://müsic.example/mot?rhead. The domain name is encoded as xn--msic-0ra.example
in something called Punycode, and the path contains the label "mot?rhead" encoded as UTF-8 and URL encoded (the Unicode code point U+00F6 is reprecented with the two bytes 0xC3 0xB6 in UTF-8).
The path could also be mot%F6rhead
which is the same label in Latin-1. In this case, deducing a reasonable human-readable representation would be much harder, but perhaps the context of the surrounding characters could offer enough hints for a good guess.
In isolation, %F6
could be pretty much anything, and %C3%B6
could be e.g. UTF-16.
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