Traditionally, computers have used ASCII, a set of 127 characters, as a result of English and American heritage. Every character can be represented with a single byte. Eventually, different countries came up with their own encodings, using the same bytes to represent different characters. For example, in a common "Western" encoding, the byte 0xFD means a Y with an acute accent, while in a common Turkish encoding, the byte 0xFD means a dotless i. And this is just for Latin-style encodings, without the thousands of characters needed by Asian languages.
With computers taking over the world, something called "unicode" was developed that (attempts to) assign a unique number to every character in every language.
So Latin Y with acute has the code 0x00FD, while a Latin dotless i has the code 0x0131. UTF-8 (see the utf-8(7) man page) is a method of encoding the unicode numbers in a backwards compatible way with Legacy systems that use ascii or Latin characters.
The first 256 unicode characters are identical to Western Latin, of which the first 127 are identical to ASCII. All ASCII characters are represented exactly the same way in UTF-8. See the UTF-8 FAQ, which has the definitive version online at 
http://www.cl.cam.ac.uk/mgk25/unicode.html.
To turn on UTF-8 support in xterm (must have been compiled with utf-8 support, xterm version 145 or later), you must invoke xterm with a certain option:
$ xterm -u8
To turn on UTF-8 support in gnome-terminal, you print a certain escape sequence to the terminal:
$ /bin/echo -ne '\033%G'
You will also need an X11 font that has the unicode characters you want to display. However, if your distribution comes with utf-8 enabled terminals, then it will almost certainly come with a decent default font. Try
$ xlsfonts | grep iso10646
to see unicode fonts you have access to. You should see some listed for "misc-fixed", which is the default font used by terminals.
You should change that to end with "-iso10646-1" instead, if you have a unicode version of the font installed. If you don't have administrator rights, you can always make your own alias file, eg put
fixed -misc-fixed-medium-r-semicondensed--13-120-75-75-c-60-iso10646-1
and now any new xterms should be able to display more non-ascii characters.
Recent versions of xterm (eg v187) create accented Latin characters if you press a letter while the Alt key is pressed (eg alt+x gives an "ΓΈ" character). This will screw up any text-mode apps that expect alt to do something different (like emacs in text-mode). If you want the old-style behaviour, add
XTerm*metaSendsEscape: true
to your $HOME/.Xdefaults file, or run
echo 'XTerm*metaSendsEscape: true' | xrdb -merge
from a command line. (It will take effect for new xterms).
to your $HOME/.emacs file.
It's a good idea to set some environment variables to tell applications what language and encoding you prefer. In NewZealand, you should do something like
$ LC_ALL=en_NZ.UTF-8 ; export LC_ALL
(This requires your system to have the correct support for this locale; if it doesn't then the administrator can add "en_NZ.UTF-8 UTF-8" to /etc/locale.gen and run locale-gen(8), which is in the "locales" package.)
The system administrator can make this the default by putting
LC_ALL=en_NZ.UTF-8
into /etc/environment (create it if it doesn't already exist).
As well as getting utf-8 support, this has the added advantage that locale-aware applications will use the correct currency symbol, unit separator, date formatting etc for your locale. (Eg, MozillaMail will show dates as dd/mm/yyyy instead of the default US mm/dd/yyyy)
If you don't have a friendly administrator or can't otherwise get root permissions, you should still be able to generate a locale if it isn't already installed:
2. Set your LOCPATH environment variable to point to the correct directory
echo 'export LOCPATH=/pkg/locale' >> /.bashrc export 'export LC_ALL=en_NZ.UTF-8' >> /.bashrc
The program uxterm is a shell script wrapper that sets up the locale properly then runs xterm with the right parameters.
This is not absolutely necessary -- you can give less the "-r" option to display raw characters, instead of octal codes. Or once you a viewing a file in less, you can type "-" then "r" to toggle this display on and off. If you have the environment variable set, then you can't toggle it. (Sometimes it is useful to see the raw utf-8 codes, for development purposes).
Mozilla has great charsets support, being so new. Netscape >= 4.05 has some support, but does have troubles. Mutt can do utf-8, but I haven't been able to get it to show the headers summary correctly. I don't know about kmail, balsa, or evolution, but my guess is that they are new enough to have good support.
The easiest thing I've found to do is to get some of the excellent Microsoft true type fonts working under linux (see HowToTTDebian? or HowToTTXFree86?) as they have put quite a bit of work into internationalisation and fonts. At the very least, "Courier new" and "Times New Roman" are good TTF fonts to use. I personally also like "Verdana" as a sans-serif font.
To convert between unicode (eg utf-8 or utf-16), use the iconv command. The -t argument is the "to" encoding and -f is the "from" encoding. For example
$ iconv -t utf-8 -f iso-8859-1 < somefile.txt > somefile-utf8.txt
This is a front end to the iconv(3) library (libiconv) that many recent programs use for handling character encoding and conversion.
perl 5.8 has significantly improved unicode/utf-8 handling over earlier versions. See the perllocale(1) and perlunicode(1) man pages. Once set to use unicode, commands like lc/uc (lower/upper case) and RegularExpression character classes (space/printable/upper/lower etc) will work as you'd expect.
Perhaps the most important tip is that by default, filehandles (including stdin(3)) are assumed to be Latin1/iso-8859-1 (most likely for backwards-compatibility?). Add
use encoding 'utf8';
to your script to change the default string encoding.
See also the HowToUnicodeHOWTO? for a decent introduction and list of support in various applications.
7 pages link to UnicodeNotes:
