Yes, normalized emails was checked, it turned it off and now I can create staged users with plus addressing.
After further testing that only allows me to create plus addresses when there’s already another user (me for instance) using the normalized version of the address.
Even with it checked I could do a random plus address IE test+this@thing.com was created, but david+test@example.com wasn’t created since david@example.com already existed.
I guess that’s as expected.