The File handling » Encoding branch of Settings has the following options.
This setting determines the default encoding used for new files (and for opening files when auto-detect fails). You can select ANSI, UTF-8 or UTF-16.
This setting may is used to force the application to use a code page (for files detected as ANSI) other than your system's default code page if desired. By default, this will be set to the default system code page.
This setting allows you to configure a specific locale to be used for time/date format and for sorting files when locale-specific sorting is required.
This setting forces the editor to scan file content on open to determine if it should be displayed with a code page other than the default code page. Once the appropriate code page is determined, the application will ask Windows to provide an appropriate font to be used to display content from that code page.
This setting is only active when Automatically detect encoding is enabled. If this option is selected, and on open the editor detects that a certain code page is required, you'll be prompted to accept the detected code page (or choose a different one) for the active file. If this is not selected, but Automatically detect encoding is enabled, the highest rated matching code page will automatically be used without any prompt.
If this is selected, the default code page (specified above) will be used for the conversion when you convert a file from Unicode to ANSI. If this option is not selected and a file is converted from Unicode to ANSI, you'll be prompted to select the code page to use for the ANSI conversion.
This option instructs the editor to automatically detect ANSI files with escaped Unicode (e.g. \u0020).