

It doesn’t. It has a feature that hides the HUD.
Ctrl-F3 switches to the third virtual desktop in KDE if you have at least three virtual desktops. If you don’t have at least three virtual desktops, it doesn’t do anything, but also prevents the input from reaching Valheim to turn off the HUD.
Or, if you never intend on using multiple virtual desktops, you can go into (I’m assuming KDE) keyboard shortcut settings and unbind Alt-F3 so it can pass into Valheim.