Can't open local HTML files in browser (worked in v1.18.4)

I can’t open any local HTML file in the built-in browser — file:// URLs get blocked with “access to file URL is blocked”. Last version where this worked was v1.18.4, currently on v1.19.6.

Adding file:// to the Browser URL Allowlist doesn’t help.

This is really frustrating because now you have to spin up a dummy HTTP server just to preview a simple local HTML file, instead of just opening it directly like before.