Character Codes

Every character needs to be converted into a number before it can be saved.
Text is represented by assigning a numerical value to each letter, digit and symbol.

link - msdn.microsoft.com/en-us/library/aa261360(v=vs.60).aspx 

Character Encoding

This is the conversion of a symbol into a binary number

ASCII

The first widely adopted standard was the ASCII character set which uses the values 0 to 127 to represent the letters, numericals and commonly used punctuation marks and characters.
For example lowercase letters a-z are represented by the values 97-122
ASCII codes 0-31 represent non printing characters.
ASCII uses a 7-bit encoding scheme that represents 128 different numbers.
ASCII only supports one alphabet

ANSI

The ANSI (American National Standards Institute) code expanded on this by adding (128-255)
ANSI is also known as extended ASCII.
ANSI uses a 8-bit encoding scheme that represents 218 numbers.
Also known as Windows-1252 and was the default font used in Windows 95.
This is compatible with ASCII.

UNICODE

It was soon realised that the 255 ASCII values were not sufficient for the number of characters that computers needed to work with.
As a result the Unicode standard was created using values 0-65,535
Only 39,000 of these codes are currently assigned
The UNICODE character set is a universal standard across all systems.
UNICODE uses a 8-bit encoding scheme and has different types.
The most popular type is UTF-8 which is compatible with ASCII.
Windows does support Unicode but it will depend on your regional settings.