UTF-8 and latin1

[Tobiah]

> You configure the web server to send:
> 
>      Content-Type: text/html; charset=...
> 
> in the HTTP header when it serves HTML files.

So how does this break down?  When a person enters
Montréal, Quebéc into a form field, what are they
doing on the keyboard to make that happen?  As the
string sits there in the text box, is it latin1, or utf-8
or something else?  How does the browser know what
sort of data it has in that text box?