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I have tried to do some research and I have to admit that I am clueless on this. If my question does not even make sense, I offer you my sincere apology for my ignorance.
PuTTY seems to use ISO-8859-1 character set by default. I had issues with common spanish chracters not displaying correctly so I changed it to UTF-8. Since I've done that, I have not had issues with displaying characters.
This might lead me to believe that the characters in ISO-8859-1 are just a subset of the UTF-8. However, I am fairly certain that it is not that simple but I still cannot get my head around it.
Please set me straight.