Ehr... Pretty weird. No idea off the top of my head why this is happening.

This occurs because the editnotice is a system message, which is parsed using MessageCache::singleton()->parse(). While parsing the editnotice, the babel box is encountered, causing the babel messages like "This user has a native understanding of English" to be parsed using wfMessage, which calls MessageCache::singleton()->transform(). But the message cache singleton is already in parsing mode (from the editnotice system message), so it simply returns the text of the babel message without parsing.

The fact that MessageCache uses global state like this suggests that this is a deep-seated architectural issue with the PHP parser, and I don't think we can do a whole lot about it other than anticipate the coming of a new parsing service.

I haven't looked back in the git history to see if this worked correctly under old MW versions, as Multichill suspected.