Valid characters of a hostname?

Checkout this wiki, specifically the section Restrictions on valid host names

Hostnames are composed of series of labels concatenated with dots, as are all domain names. For example, "en.wikipedia.org" is a hostname. Each label must be between 1 and 63 characters long, and the entire hostname (including the delimiting dots but not a trailing dot) has a maximum of 253 ASCII characters.

The Internet standards (Requests for Comments) for protocols mandate that component hostname labels may contain only the ASCII letters 'a' through 'z' (in a case-insensitive manner), the digits '0' through '9', and the hyphen ('-'). The original specification of hostnames in RFC 952, mandated that labels could not start with a digit or with a hyphen, and must not end with a hyphen. However, a subsequent specification (RFC 1123) permitted hostname labels to start with digits. No other symbols, punctuation characters, or white space are permitted.

A "name" (Net, Host, Gateway, or Domain name) is a text string up to 24 characters drawn from the alphabet (A-Z), digits (0-9), minus sign (-), and period (.). Note that periods are only allowed when they serve to delimit components of "domain style names". (See RFC-921, "Domain Name System Implementation Schedule", for background). No blank or space characters are permitted as part of a name. No distinction is made between upper and lower case. The first character must be an alpha character. The last character must not be a minus sign or period. A host which serves as a GATEWAY should have "-GATEWAY" or "-GW" as part of its name. Hosts which do not serve as Internet gateways should not use "-GATEWAY" and "-GW" as part of their names. A host which is a TAC should have "-TAC" as the last part of its host name, if it is a DoD host. Single character names or nicknames are not allowed.

This is provided in http://support.microsoft.com/kb/149044

It depends on whether you process IDNs before or after the IDN toASCII algorithm (that is, do you see the domain name παράδειγμα.δοκιμή in Greek or as xn--hxajbheg2az3al.xn--jxalpdlp?).

In the latter case—where you are handling IDNs through the punycode—the old RFC 1123 rules apply:

U+0041 through U+005A (A-Z), U+0061 through U+007A (a-z) case folded as each other, U+0030 through U+0039 (0-9) and U+002D (-).

and U+002E (.) of course; the rules for labels allow the others, with dots between labels.

If you are seeing it in IDN form, the allowed characters are much varied, see http://unicode.org/reports/tr36/idn-chars.html for a handy chart of all valid characters.

Chances are your network code will deal with the punycode, but your display code (or even just passing strings to and from other layers) with the more human-readable form as nobody running a server on the السعودية. domain wants to see their server listed as being on .xn--mgberp4a5d4ar.