it simply displays both strings.
Are you sure the multi-language filter has been enabled?
Not only multilang filter has to be enabled but you need to explicitly run your multilang-formatted text through the function that does the magic of picking up the correct subtext.
How can I do that via the frontend GUI?
The filter is enabled.
From the filters documentation:
filter will be called to transform every bit of text output using format_text(), and possibly also format_string()
So the text should be processed by these functions (https://docs.moodle.org/dev/Output_functions)