Java supports non-ASCII for names of variables, classes and so forth. If you receive files from some developer with non-ASCII name in them which you don't want to corrupt, using native2ascii is one (dodgy, IMO) option you have to convert it to a plain ASCII file which compiles to the same result. Because Sun wanted to support this, Unicode escapes work anywhere, not just inside strings.
The fact that they also work for encoding basic stuff like double quotes is highly amusing, though.
BTW, if you run the file through