The Guardian is in the UK, but I've seen dialogs like that even on some german sites, so i guess it's legal.

> is it legal for websites to ask me to either accept tracking or pay

It's complicated and actively being ruled on in different ways by different countries.

It is a gray zone. Some national regulatory agencies has said ”pay or consent” is compatible with GDPR and some have said it is not. It hasn’t yet been tested by the EU court.

You can't usually force a business to do business with you (i.e. serve you content, for free) even in the EU

IANAL but the legal argument seems pretty simple to me based on that concept, so I wonder if that's why it hasn't gone to court yet?

Do we as users even want it to? Imagine if the organisations won...