I thought Unicode was about foreign characters so why Firefox isn't showing accents but strange characters instead when Unicode Character Encoding is chosen ?
The encoding you select in your browser tells the browser to interpret the page as if it were written in the selected encoding. Usually the server (or the HTML file) tell the browser themselves what encoding the page is in. So usually the automatic selection should be correct.
If you override this manually and select an encoding the page does not use then it's normal that you will see strange characters: The result of the browser trying to interpret the page as if it were written in the selected encoding. If the page was written in Latin 1 and contains a word using an umlaut like ö for example, then you will probably see U+FFFD (� – usually a question mark in a black diamond or an empty square) in its place (and maybe gobbling up the following character) if you select Unicode (UTF-8) as the page encoding.
Conversely, if the page was written in UTF-8 and you select Latin 1 then you will see the characters "Ã¶" instead of "ö". You are just telling the browser what it should try interpreting. You have no guarantee that your guess was correct.