I’ve just had a quick run-through on my test site and it seems to work okay for me:
I signed up test_eleven@jammydodger.monster and the account was allowed to go straight through after validating their email, whereas signing up one with a gmail address was held in the approval queue until I manually ticked their box.
Could you give me some more details that could maybe help me replicate this issue? As you’re hosted with us I could also make this topic a PM if you’d like more direct support or want to share anything privately?