Why is langcode in configuration files ignored during installation? I have noticed that if I install Drupal in language other than English any config that will be imported during installation will be assigned to that language no matter what language is set in the config itself (the langcode value).

This results in a strange fact that my English config is showing up as XY language and if I enable English I can translate this config only into English, which does not make sense.

So how is Drupal 8 supposed to be installed properly when it comes to i18n?

Currently I am installing in English, and in last step of installation process I add my desired language and set it as default. But that seems like odd thing to be required in order for Drupal to work "properly".
It has to work like this. The alternative would be that a single-language non-English site would need to use the configuration translation to translate its configuration.

For the en langcode configuration, the installer will attempt to override it with the provided locale translations, from localize.drupal.org or local, and store the original English configurations separately, as far as I know. So, if you install in a language where you have translations, it should use them; if you don't, you have to change your configuration to the desired language.