Today's computers mostly work on the basis of dealing with one "byte" at a time. A byte is a unit of storage than can contain any number from 0 through 255--256 values in all. It's very convenient for computers to associate one character with each of these numbers, so that we can have up to 256 "letters" viewable from the values stored in one byte. The first 128 values, zero through 127, are defined by ASCII--so, for example, in ASCII, the number 65 represents a capital "A", 97 represents a lowercase "a", 49 stands for the digit "1", 45 for the hyphen "-", and so on.
ASCII doesn't define characters for the values 128 through 255, and in early days computer manufacturers used these values to hold non-ASCII characters like accented letters and box-drawing lines. Of course, 128 wasn't nearly enough values to hold all of the characters that people needed to use for different languages, so they made the character sets switchable, so that a PC in France could use a different set of accented letters from a PC in Poland. Microsoft's version of this was called Codepages. Each Codepage held a different set of non-ASCII characters. Codepage 437, and later Codepage 850, were commonly used for English and some major Western European languages on MS-DOS.
MacRoman was Apple's first codepage, containing most of the accented letters in Latin-derived languages, and MacRoman is still in common use on Apple Macs today.
Later, the International Standards Organization ISO got around to looking at the problem, and defined ISO-8859-1, ISO-8859-2 and so on, as the standards for different language groups. These sets all define the characters 160 through 255 as accented letters and other symbols, and define the 32 characters from 128 through 159 as control characters.
Since Microsoft Windows has no use for the control characters 128 through 159, Windows fonts commonly use Codepage 1252, which has ASCII in the first 128 characters, ISO-8859-1 in characters 160 through 255, and other symbols in the characters 128 through 159. Just to make an already chaotic system worse, all characters can be defined differently in different fonts!
Of course, most of these codepages are incompatible with each other. For example, the byte value 232 shows as a lower-case "e" with a grave accent in ISO-8859-1 and CP1252, a capital letter "E" with diaeresis in MacRoman, a Latin capital letter "Thorn" in CP850, a Cyrillic lower-case "Sha" in ISO-8859-5, a Greek capital letter "Phi" in CP437, and so on. So if you view a text intended for one of these character sets with a program that assumes a different character set, you see gibberish.
The good news, for mostly-English texts at least, is that ISO-8859-1, Codepage 1252 and Unicode agree on the numerical values of the accented characters and symbols to be represented by the values 160 through 255. And everybody accepts ASCII--a pure ASCII file is valid ISO-8859-anything, valid Codepage-anything, and valid Unicode UTF-8.
For more detail about the mappings between Unicode and other formats,
you can view Unicode<-->ISO-8859 mappings at
ftp://ftp.unicode.org/Public/MAPPINGS/ISO8859/
Unicode<-->Windows mappings at
ftp://ftp.unicode.org/Public/MAPPINGS/VENDORS/MICSFT/
and Unicode<-->Apple mappings at
ftp://ftp.unicode.org/Public/MAPPINGS/VENDORS/APPLE/
If you're not confused enough by now, please read the excellent guide to the whole "alphabet soup" problem at <http://aspell.com/charsets/>.