Gravity Forms doesn’t perform any changes to the values entered into Email fields. So there must be something else doing that in your site. Try doing a full conflict test.
I tried two different WordPress default installations, one with PHP 8.0.14 and another with PHP 7.4.3, and in both cases I can’t even submit a form using abc@æ.dk as it’s not accepted as a valid email address: Screenshot aby1isODRw.png - Droplr
This is expected because email addresses are validated by WordPress, specifically the is_email function, which doesn’t accept i18n domains as you can read on the documentation for this function linked above.
WordPress does include a filter in that function so the result can be overridden by a custom function added to theme and/or plugins.
So if you don’t have any third-party plugin enabled and you’re using a default WordPress theme without custom functions (e.g. Twenty Twenty-One).
I would think about something at the host side of things (e.g. PHP version or setup related), or even something in your browser doing the domain conversion.