Python 3 internally uses UTF-32. When exchanging data with the outside world, it uses the "default encoding" which it derives from various system settings. This usually ends up being UTF-8 on non-Windows systems, but on weird enough systems (and almost always on Windows), you can end up with a default encoding other than UTF-8. "UTF-8 mode" (https://peps.python.org/pep-0540/) fixes this but it's not yet enabled by default (this is planned for Python 3.15).
You are correct. Discussions of this topic tend to be full of unvalidated but confidently stated assertions, like "Python 3 internally uses UTF-32." Also unjustified assertions, like the OP's claim that len(" ") == 5 is "rather useless" and that "Python 3’s approach is unambiguously the worst one". Unlike in many other languages, the code points in Python's strings are always directly O(1) indexable--which can be useful--and the subject string has 5 indexable code points. That may not be the semantics that someone is looking for in a particular application, but it certainly isn't useless. And given the Python implementation of strings, the only other number that would be useful would be the number of grapheme clusters, which in this case is 1, and that count can be obtained via the grapheme or regex modules.
Apparently Python uses a variety of internal representations depending on the string itself. I looked it up because I saw UTF-32 and thought there's no way that's what they do -- it's pretty much always the wrong answer.
It uses Latin-1 for ASCII strings, UCS-2 for strings that contain code points in the BMP and UCS-4 only for strings that contain code points outside the BMP.
It would be pretty silly for them to explode all strings to 4-byte characters.