They provide free subdomains, not free domains. Title is misleading.
However ofc getting a subdomain under a gTLD comes with all the benefits and promises ICANN provides. Which this won't.
The main distinction here is really just that keeping eu.org costs 20 bucks a year or whatever, and creating a subdomain costs them ~nothing, so it's not really remarkable that these are free, whereas, for example, a free .org would be remarkable.
How are browsers handling it differently?
If they weren't on the public suffix list, cookies would be shared.
This also affect a myriad of other contexts that the browser applies against the public suffix list.
There exist people who disapprove of this behavior.
A few years ago I tried all two-letter ([a-z]) TLDs and found some others that were able to handle HTTP requests, but they were either just redirecting to another domain name (the ones I noted down back then don't seem to work anymore) or returning 500 errors (http://uz/).
These examples should at least demonstrate that there shouldn't technically be some special case for resolving TLDs. They work in normal web browsers, and presumably a lack of A records for other TLDs would just be some sort of convention.
curl http://ai
Apache's Hello world:
curl http://pn
ping tk
ping uz
ping cm
All others had this error:
curl: (6) Could not resolve host: %tld%
One way to define a distinction is to look at liability and legal standing. Do users under eu.org have any rights, and if there is abuse, how much legal liability do eu.org have? To take an example, HN users can be kicked out of here at the whims of ycombinator. TLD's usually don't do that and generally require a court decisions before a persons domain can be taken away (assuming fees have been paid).
For example would you consider .co.uk domains as subdomains