Collation refers to the character set used to store data in text fields and is necessary to provide support for all of the many written languages of the world. MySQL 4.1 added the ability to override the default system collation at the database, table, and field level.

The default collation in MySQL, latin1_swedish_ci, works fine for English because English contains no special characters such as accents. phpMyAdmin allows you to edit the collations of your database, tables, and fields if you desire to support languages other than or in addition to English.

Read more about collation here.