Character encoding is a system that pairs each character in a language with a specific number, allowing computers to store and manipulate text. For example, the letter "A" might be represented by the number 65 in the ASCII encoding scheme. This ensures that when you type a letter, the computer understands and displays it correctly. Different character encodings exist to support various languages and symbols. UTF-8 is a popular encoding that can represent every character in the Unicode standard, making it versatile for global communication. By using character encoding, software can accurately process and display text from different languages and scripts.