When computers were still using large black text oriented screens or no screens at all, a computer only knew how to store a limited set of characters. Then it was normal to store a name with the more complicated characters replaced by more basic characters. The ASCII standard was used to make communication between multiple systems (or applications) easier. Storing characters as ASCII needs little space and is quite strait forward.
Then DOS used CP850 and CP437 and so on to make it possible to use language /location specific characters. Then ISO8859-1, ISO8859-15 and more of these character sets were defined as standard.
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