How can this be legal syntax

I was quite amazed to find that this piece of code actually works while
reviewing code.
I would prefer if it gave an error :)

test=# create or replace function test(i_input text) returns text as
$$
declare
result text;
begin
SELECT
CASE
WHEN lower(i_input) ~ '^[a-z]' THEN 'S'
WHEN i_input ~ '[0-9]' THEN 'N'
ELSE 'ERROR'
INTO result
END;
return result;
end;
$$
language plpgsql security definer;
CREATE FUNCTION
test=# select * from test('aaaa' );
test
------
S
(1 row)

test=# create or replace function test(i_input text) returns text as $$
declare
result text;
begin
SELECT
CASE
WHEN lower(i_input) ~ '^[a-z]' INTO result THEN 'S'
WHEN i_input ~ '[0-9]' THEN 'N'
ELSE 'ERROR'
END;
return result;
end;
$$ language plpgsql security definer;
CREATE FUNCTION
test=# select * from test('aaaa' );
test
------
S
(1 row)