For "normal" characters, only 8 bits are used. For characters that are not suitable for 8 bits, more bits can be used. This makes UTF-8 a variable-length encoding.
Wikipedia has a good article on UTF-8.
ASCII defines only 128 characters. So just 7 bits. But usually it is stored with 8 bits / character. RS232 (old serial communication) can be used with 7-bit bytes.
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