When the anvil detects a word that is censored, the error dialog immediately appears. While there is a work around for this by misspelling the word then fixing it using arrow keys, it's very inconvenient. On Android you can also type past the dialog. On Windows you apparently cannot according to YT videos I've seen.

To reproduce, attempt to rename any item "night". After the third letter, the error pops up.

Expected behaviour: error only occurs when removing the item from the anvil, or upon typing space or other character that ends a word. Alternatively, use the same icon for when you don't have enough levels if the name contains a banned word, with a different error message. Care needs to be taken here because the default name of some items contain banned words. These words arguably should simply be removed from the ban list, but a resource pack/data pack/mod could also cause this problem so it still needs to be dealt with.