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UTF-8 is a way to encode Unicode text in 8-bit chunks. It has the advantage of being backwards-compatible with ASCII, but will use two to four bytes to encode higher Unicode characters such as Cyrillic or Japanese text. (That is, any code point of greater value than 127 will require at least two bytes.)

See Also

Joel Spolsky's "The Absolute Minimum Every Software Developer Absolutely, Positively Must Know About Unicode and Character Sets (No Excuses!)"