The following is a gross understatement, so don't hesitate to read the MySQL documentation which, IMHO, is pretty good compared to some.
If you are planning on only ever storing the "128 American keyboard" characters, you probably don't need to worry about it much, though of course the more you know the better
But as soon as you go outside of these, from "fancy quotes" to umlauts and tildes to Chinese glyphs, etc. then the character set becomes more important.
I think UTF-8 is a wise choice and covers most languages and characters you're likely to ever use.
Collation is important if you plan on having text searches of the database. I don't have a real example, but as I understand it, say that in most langauges
"a" is "less than" "e", there may be a language where the character "e" comes first, so the query would fail. Again, if you know you won't ever be working with anything other than American English, it's probably not worth fretting about.