If you inspect the responseHeader "Content-Encoding" after you called send like so:

MsgBox xh.getResponseHeader("Content-Encoding")

xh.setRequestHeader "Accept-Encoding", "deflate;q=1.0"

decompressedsize = size(3) * 2 ^ 32 + size(2) * 2 ^ 16 + size(1) * 2 ^ 8 + size(0)

Dim xh As Object
Set xh = CreateObject("MSXML2.serverXMLHTTP")

seurl = "https://api.stackexchange.com/2.3/tags?order=desc&sort=popular&site=stackoverflow"
          
xh.Open "GET", seurl, False
xh.setRequestHeader "Accept-Encoding", "gzip;q=1.0"
xh.Send

MsgBox xh.getResponseHeader("Content-Encoding")

Dim httpresponse() As Byte

httpresponse = xh.responseBody

Mod_Inflate64.Inflate httpresponse

MsgBox StrConv(httpresponse, vbUnicode)

Note that browsers offer the decompression to you by default but the MSXML2.serverXMLHTTP COM/OLE component pre-dates the modern compression habits. It simply lacks the option to cope with that kind of responses.

If you inspect the responseHeader "Content-Encoding" after you called send like so:

MsgBox xh.getResponseHeader("Content-Encoding")

xh.setRequestHeader "Accept-Encoding", "deflate;q=1.0"

    decompressedsize = size(3) * 2 ^ 32 + size(2) * 2 ^ 16 + size(1) * 2 ^ 8 + size(0)

Dim xh As Object
Set xh = CreateObject("MSXML2.serverXMLHTTP")

seurl = "https://api.stackexchange.com/2.3/tags?order=desc&sort=popular&site=stackoverflow"
          
xh.Open "GET", seurl, False
xh.setRequestHeader "Accept-Encoding", "gzip;q=1.0"
xh.Send

MsgBox xh.getResponseHeader("Content-Encoding")

Dim httpresponse() As Byte

httpresponse = xh.responseBody

Mod_Inflate64.Inflate httpresponse

MsgBox StrConv(httpresponse, vbUnicode)

The response from Stack Exchange is always compressed, as indicated by Glorfindel.

If you inspect the responseHeader "Content-Encoding" after you called send like so:

MsgBox xh.getResponseHeader("Content-Encoding")

You will see gzip as an answer.

You can indicate to the server with a RequestHeader Accept-Encoding what encoding/compression you support. Add this line before the send method:

xh.setRequestHeader "Accept-Encoding", "deflate;q=1.0"

and you'll get

The response from Stack Exchange is always compressed, as indicated by Glorfindel.

If you inspect the responseHeader "Content-Encoding" after you called send like so:

MsgBox xh.getResponseHeader("Content-Encoding")

You will see gzip as an answer.

You can indicate to the server with a RequestHeader Accept-Encoding what encoding/compression you support. Add this line before the send method:

xh.setRequestHeader "Accept-Encoding", "deflate;q=1.0"

and you'll get deflate as Content-Encoding response.

According to the HTTP specification identity is a valid Accept-Encoding and should instruct the server to not use compression. This is where our luck runs out as the Stack Exchange server is non-compliant here. It simply falls back to its preferred default compression: gzip. I think SE should return a 406 Not Acceptable in this case, but meh.

Given that we can't tell the server to send a plain response, we have to somehow decompress the received response body. After some searching I found How to decompress http responses in vba excel? by user Mavin which has a complete native VBA module with an Inflate method.

I'm not sure how recent the Excel is you have but when testing this on Excel 2010 I ran into a problem with the use of Application.WorksheetFunction.Bitlshift in the checkgzip function which doesn't exist in older Excel versions. I have replaced that line with

decompressedsize = size(3) * 2 ^ 32 + size(2) * 2 ^ 16 + size(1) * 2 ^ 8 + size(0)

to achieve the same result.

My whole main program now looks like:

Dim xh As Object
Set xh = CreateObject("MSXML2.serverXMLHTTP")

seurl = "https://api.stackexchange.com/2.3/tags?order=desc&sort=popular&site=stackoverflow"
          
xh.Open "GET", seurl, False
xh.setRequestHeader "Accept-Encoding", "gzip;q=1.0"
xh.Send

MsgBox xh.getResponseHeader("Content-Encoding")

Dim httpresponse() As Byte

httpresponse = xh.responseBody

Mod_Inflate64.Inflate httpresponse

MsgBox StrConv(httpresponse, vbUnicode)

and when run this is the result: