When you convert temperature readings from Centigrade to Fahrenheit or money from Japanese Yen to US Dollars, the original values remain the same. They are just represented in a different form.
In the world of computers, encoding works in the same way. The computer converts data from one form to another. It does this to save on storage space or to make transmission more efficient.
One example of encoding is when you can convert a huge .WAV audio file to a tiny .MP3 that you can easily send to a friend via email. The files are encoded in different formats but will play the exact same song.
Other interesting terms…