This annoys me too, and is non-obvious to the typical user, I would expect.
There is a forum post on this, but the plan was to start using correct URLs.
This was for compatibility with standard tools, but that idea fell apart a little.
Proper URLs don’t allow Unicode in host part, but Duplicati can need them.
Some of its URL-like formats use the first part for things like the path name.
some destination parts force entry input to lower case or Punycode #376
Correct URLs don’t allow colon except in specific spots. We need dev input.