From MozillaZine Knowledge Base
According to RFC 3987, URLs must be converted to UTF-8 character encoding. IE and Opera, contrary to the specification, encode the path part of the URL in UTF-8 but encode the query string part of the URL in the encoding of the referring page. Many servers expect IE and Opera's behaviour and break when presented with fully encoded URLs. This preference controls whether to encode URLs in UTF-8.
Possible values and their effects
Encode URLs in UTF-8 as per the standard.
Do not encode URLs at all. This is different than IE and Opera's behaviour in that not even the path is encoded. (Default)
First checked in
Has an effect in