Why doesn't PowerShell Core 7 recognize UNC paths when Windows PowerShell and cmd do?

Your path syntax is unrelated to UNC paths; it uses a special prefix^[1], \\?\, whose purpose is to opt into support for file-system paths whose length exceeds 259 characters.

In Windows PowerShell (the legacy PowerShell edition that ships with Windows, whose latest and final version is v5.1):

• \\?\ is supported, as shown in your question.

In PowerShell (Core) 6+ (the cross-platform, install-on-demand edition):

• \\?\ is no longer needed, because long paths are supported by default.

• That said, it should still be supported - not least in order to support code that runs in both PowerShell editions - and the fact that it isn't, as of PowerShell 7.2 - situationally resulting in no output, with wildcard paths, Get-ChildItem -Path \\?\C:\Users\*, or with the root directory's content(!), with literal paths Get-ChildItem -LiteralPath \\?\C:\Users - is the subject of GitHub issue #10805.

^{[1] Such prefixes identify Win32 namespaces. The specifics of \\?\ are explained here.}

Given this convention is specific to Win32 (and PowerShell has been re-written to be cross-platform), it is likely that this is simply not supported any longer.

If you have other parts of the code that expect this format, a well-placed inline -replace can strip it off

$("\\?\C:\Users\*" -replace '\\\\\?\\', '')