Steps to Reproduce:
Actual Results:
It dutifully adds the character formatting: <ref>Foo</ref> becomes '''<ref>Foo</ref>'''
Reproducible: Didn't try
Version: unspecified
Severity: minor
It's not just refs: templates, hieroglyphics, galleries, math equation... Not images, though.
Why not? This is entirely valid, and relatively common, wikitext… VE has to let you make all kinds of stupid stylistic errors, because (a) it's our job to let you do anything you can validly do in wikitext, and (b) you might want to use VE to correct such things, which stripping in VE would prevent.
If it's "valid", then why doesn't it do anything?
'''<ref>Foo</ref>''' doesn't actually produce a bold-faced [1].
I see your point about (b) but you can't see the existence of the misplaced bold in VisualEditor, so I doubt that anyone would actually use it to fix it.