This feature was added in 2004-2005 for the same reason as the Esperanto conversion mentioned in bug 60677: "[...] when many browsers with really bad Unicode support were still in use" (languages/classes/LanguageEo.php).
By default, the blacklist includes:
- Netscape 2-4 and IE for Mac, which are unsupported, dead browsers.
- Google Wireless Transcoder, which doesn't seem to allow editing (the text box and "Save Changes" button are missing) and isn't currently detected either.
Yet Wikimedia's CommonSettings.php adds Lynx, which on many systems now does support UTF-8.
It seems likely that the problem that this setting addresses is no more, and thus the setting should be removed (or at least the EditPage::makeSafe() and EditPage::unmakeSafe() methods added in r10313 / 10392e098349 to address bug 2676).