Noting that for {{#language:fr|en}} it correctly gives French.

Which makes this less of a bug, but more something along the lines of "translations that don't exist in cldr".

This may be due to we're on CLDR 38, 42 is out. The upgrade has been blocked (as per the comments on T295637: Update cldr to latest released version) for a little while

It looks like it doesn't get fixed in 42...

Translations should be submitted upstream - https://cldr.unicode.org/#h.e0bvgcv2blgp

In T324892#8458867, @Reedy wrote:

It looks like it doesn't get fixed in 42...

Translations should be submitted upstream - https://cldr.unicode.org/#h.e0bvgcv2blgp

Or locally into MediaWiki-extensions-CLDR in LocalNamesEn.php.

But otherwise this is working as intended, as it's falling back to the local language translation if one doesn't exist (especially in English)