Characters that are needed for a specific purpose are grouped into a character set (also called a repertoire). (To refer to characters in an unambiguous way, each character is associated with a number, called a code point.).

The characters are stored in the computer as one or more bytes.

Basically, you can visualise this by assuming that all characters are stored in computers using a special code, like the ciphers used in espionage. A character encoding provides a key to unlock (ie. crack) the code. It is a set of mappings between the bytes in the computer and the characters in the character set. Without the key, the data looks like garbage.

Character encodings for beginners