Case insensitivity and "what human brains do" becomes incredibly complicated outside of English. There are also many other things which human brains recognize as the same thing but would be unreasonable to implement in filesystems.
In Japanese, くるま, クルマ, and 車 are all the same word (the first two are the phonetic spelling "kuruma", the later is the Chinese character). However in order to know that 車 is read くるま you need to be a native Japanese speaker (or have a dictionary) -- should filesystems have dictionaries to match what a human would think? Search engines that support Japanese have to handle this to some degree, but I humbly suggest implement Google Search's language handling code into a filesystem would be an ill-advised decision.
If you wanted to implement the most minimal version of this you would map between katakana and hiragana, but that means you'll need to do this for other languages. For instance, Serbian. Serbian uses two scripts (both of which have upper and lower case forms) and any native Serbian speaker would see "tuđa ljuta paprika" and "туђа љута паприка" as the same text (note that lj became љ). Should that also be automatically translated in the filesystem?
In German, capitalisation is not reversible. ß becomes SS when capitalised but will be lowercased as ss. (There is now a capital version -- ẞ -- but from what I gather it's not widely used.)
Even in English you have British and American spellings of a given word -- native speakers would recognise them as the same thing but it would not be reasonable to expect a filesystem to map them to the same thing. Initialisms can have different identical representations (N.S.A vs NSA). And you also have cases where capitalisation actually does distinguish words (May vs may, PRISM vs prism, CAT vs cat, etc). What about fullwidth and halfwidth latin characters (Ｈｅｌｌｏ vs Hello)? Arguably those are even more identical than upper and lower case.
For all of the above reasons, case insensitivity is something which most systems will only ever implement for English and a few other European languages, meaning that it's more of a wart than a fully-working feature. If the argument really is "well, a human would recognise these two names as the same thing, so the filesystem should too" then why are none of the other examples given above handled? If it's too difficult to do correctly (which is my view) then why support any of this in the first place? However, everything should be normalised (NFC or NFD depending on your usecase).