The article http://mysqldump.azundris.com/archives/60-Handling-character-sets.html discusses this in detail, and also shows what will happen.
Note that you are mixing CHARACTER SET (actually an encoding) with COLLATION.
A character set defines the physical representation of a string in bytes on disk. You can make this visible using the HEX () function, for example SELECT HEX(str) FROM t WHERE id = 1 , to find out how MySQL stores the bytes of your string. What MySQL provides you with may vary depending on the character set of your connection defined with SET NAMES ....
Sort - sort order. It depends on the character set. For example, your data may be in the latin1 character set, but it can be ordered according to either of the two sorting orders of the German latin1_german1_ci or latin1_german2_ci. Depending on your choice, Umlauts like ΓΆ will either sort as oe or o.
When you change the character set, the data in the table must be overwritten. MySQL will read all the data and all indexes in the table, make a blind copy of the table, which temporarily takes up disk space, and then moves the old table to a hidden place, moves the hidden table in place and then deletes the old data, freeing up disk space. For some time between them you will need two times for storage.
When you change the sort order, the data sort order changes, but not the data itself. If the column you are editing is not part of the index, you do not need to do anything other than overwrite the frm file, and the latest versions of MySQL should not do enough anymore.
When changing the sorting of a column that is part of an index, the index needs to be rewritten, since the index is a sorted table excerpt. This will again invoke the ALTER TABLE table copy logic described above.
MySQL tries to save data by doing this: as long as the data that you have can be represented in the target character set, the conversion will not be lost. Warnings will be printed if data truncation occurs, and data that cannot be represented in the target character set will be replaced by?