Comment 1 for bug 1945023

For now, to get the behavior you want please move testuser to user-data.
Identity is not required if you're supplying user-data.

The merge of config today isn't sophisticated enough to do something like merge the identity section user into user-data.

FWIW, the docs at https://ubuntu.com/server/docs/install/autoinstall-reference look a bit misleading and make it sound like you'd get OK results with both, but today you definitely want to send all your users through user-data.