Taking a look at the spec [1], the W3C states that the input must be a "valid date string with optional time". This, in turn, links through to the microsyntax spec [2], which gives a number of acceptable input patterns - none of which are a Unix timestamp.
I find this to be a curious design decision as the purpose for the time element itself, as stated by the W3C, is "...a way to encode modern dates and times in a machine-readable way..." - and what would be more machine-readable than a Unix timestamp?
Is it simply because a Unix timestamp is - on it's face - a number and not a string? Just wondering if anyone here had any additional insight.
[1] https://www.w3.org/TR/2011/WD-html5-author-20110809/the-time-element.html
[2] https://html.spec.whatwg.org/multipage/common-microsyntaxes.html#valid-date-string-with-optional-time