How can different character sets affect PHP output and display?

Different character sets can affect PHP output and display by causing issues with encoding and rendering special characters. To ensure proper display, it is important to set the correct character encoding in PHP using functions like `header()` or `mb_internal_encoding()`. Additionally, using functions like `htmlentities()` or `htmlspecialchars()` can help encode special characters to prevent display issues.

// Set the character encoding to UTF-8
header('Content-Type: text/html; charset=UTF-8');

// Encode special characters before output
echo htmlentities($output);