Meaning of –

I am new to XML and I am trying to understand the basics. I read the line below in “Learning XML”, but it is still not clear, for me. Can someone point me to a book or website which explains these basics clearly?

From Learning XML:

The XML declaration describes some of the most general properties of the document, telling the XML processor that it needs an XML parser to interpret this document.

What does this mean?

I understand the xml version part – both doc and user of doc should “talk” in the same version of XML. But what about the encoding part? Why is that necessary?

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