Here is a quite long answer to try to be specific on my understanding of that case...

Does that help?

In some way, but not completely. :op
I am quite familiar with encodings (at least iso-8859-1 & 15, Win1252, "DOS" 437 & 850 utf-8 and utf-16) but I did not figured the data flow in Perl, yet.

I think I did not get what part of the "magic" is done

• at the (windows CMD) terminal level
• by the xml parsing / decoding (if any?)
• at the Perl internal level

chcp
Active code page: 1252

perl -e "print chr 199"
Ç

perl -e "print join ' ', map {sprintf '%02x', $_} unpack 'C*', chr 199
+"
c7
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I am in Win1252 and the code 199 (= 0xc7) corresponds to the upper-case c-cedilla character. Okay.

perl -MEncode -e "print Encode::encode_utf8 chr 199"
Ç

perl -MEncode -e "print join ' ', map {sprintf '%02x', $_} unpack 'C*'
+, Encode::encode_utf8 chr 199"
c3 87
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So if encode the byte 199 to utf-8 (I seem to understand "from the current console codepage"), I get the values c3 87 that correspond to the U+00c7 unicode "LATIN CAPITAL LETTER C WITH CEDILLA". I still follow.

perl -MEncode -e "print Encode::decode_utf8 \"\xc3\x87\""
Ç
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If I decode a raw "c3 87" I get back my "Ç", so everything is how I suppose it to be.
Now, your part:

Encoding can be a challenge to get one's head around. When you read the strings in from your XML parsing, Perl pulls them in as a series of UTF-8 characters, and the string that contains them has the UTF-8 flag set to true. In order to determine the length of the string, each byte must be queried to determine to figure out how many characters are represented, thus the slow length.

Well... Not sure: Here is a simple utf8-1.xml file:

<?xml version="1.0" encoding="utf-8"?>
<root>Ç foo</root>
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(to be sure, if hex-editing the file, we see actually C3 87 in the place of the char 199)
With a little sax parser:

use strict;
use warnings;
use feature 'say';
#~ use utf8;
use XML::SAX::ParserFactory;

$|++;

#to force one kind of parser for ParserFactory->parser()
#~ $XML::SAX::ParserPackage = "XML::SAX::PurePerl";
#~ $XML::SAX::ParserPackage = "XML::SAX::Expat"; #no xml_decl
#~ $XML::SAX::ParserPackage = "XML::SAX::ExpatXS";
#~ $XML::SAX::ParserPackage = "XML::LibXML::SAX";
$XML::SAX::ParserPackage = "XML::LibXML::SAX::Parser";

{
    package MySax;
    use feature 'say';
    use Devel::Peek;

    sub new {
        my $class = shift;
        return bless {}, $class;
    }

    sub hexprint {
        my ($self, $data) = @_;
        join ' ', map { sprintf '%02X', $_ } unpack 'C*', $data;
    }
    
    sub characters {
        my ($self, $data) = @_;
        my $content = $data->{Data};
        say "characters for elt: ". $content;
        say "bytes for elt: ". $self->hexprint($content);
        Dump($content);
    }
}

my $handler = new MySax;
my $parser = XML::SAX::ParserFactory->parser(Handler => $handler);
say "parser is " . ref $parser;
say "file: " . $ARGV[0] if $ARGV[0];
$parser->parse_file($ARGV[0] // *DATA);

__DATA__
<empty/>
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I can see:

perl sax_utf.pl utf8-1.xml
parser is XML::LibXML::SAX::Parser
file: utf8-1.xml
characters for elt: Ç foo
bytes for elt: C7 20 66 6F 6F
SV = PV(0x288c658) at 0x233d2e8
  REFCNT = 1
  FLAGS = (PADMY,POK,IsCOW,pPOK,UTF8)
  PV = 0x2b28228 "\303\207 foo"\0 [UTF8 "\x{c7} foo"]
  CUR = 6
  LEN = 10
  COW_REFCNT = 1
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Can I assume the following:

• the 199 / 0xC7 character was decoded by libxml, as I see that its byte is "C7"
• but the string is flagged as utf-8?
• and internaly, the byte flow is actually some utf-8, as shown by the (unusual but in my Emacs editor) \303\207 octal values = C3 87

So 1 )in can't understand the difference between the unpack and Devel::Peek dumps.
and 2) I cannot see why would do the following

Invoking Encode::encode_utf8($data) returns the UTF-8 string transformed into the equivalent byte stream. Essentially, from Perl's perspective, it breaks the logical connection between the bytes, and leaves it as some combination of high bit and low bit characters. Now, since every record in the string is exactly 1 byte wide, the byte count requires no introspection.

If the string is already in utf-8, why processing it with encode_utf8 ?
If I patch the sub characters like this:

    sub characters {
        use Encode;
        my ($self, $data) = @_;
        my $content = Encode::encode_utf8 $data->{Data};
        say "characters for elt: ". $content;
        say "bytes for elt: ". $self->hexprint($content);
        Dump($content);
    }
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Now I see (still in a Windows console in cp1252) :

characters for elt: Ç foo
bytes for elt: C3 87 20 66 6F 6F
SV = PV(0x28ba328) at 0x236d2b8
  REFCNT = 1
  FLAGS = (PADMY,POK,IsCOW,pPOK)
  PV = 0x2b548b8 "\303\207 foo"\0
  CUR = 6
  LEN = 10
  COW_REFCNT = 1
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So unpacking the string shows the expected C3 87 bytes for the char 199, confirmed by the octal dum, but the UTF8 flag has vanished? I'm puzzled!

Now an additional challenge: I make a copy of the first xml, to add the euro sign into the data ("Ç foo €") so the hex-editing of the file shows C3 87 20 66 6F 6F 20 E2 82 AC.
With the non utf-8 forcing of the string, it shows this in the console:

parser is XML::LibXML::SAX::Parser
file: utf8-2.xml
Wide character in say at sax_utf.pl line 36.
characters for elt: Ç foo €
bytes for elt: C7 20 66 6F 6F 20 20AC
SV = PV(0x2a61748) at 0x250ade8
  REFCNT = 1
  FLAGS = (PADMY,POK,IsCOW,pPOK,UTF8)
  PV = 0x2cefc98 "\303\207 foo \342\202\254"\0 [UTF8 "\x{c7} foo \x{20
+ac}"]
  CUR = 10
  LEN = 12
  COW_REFCNT = 1
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Now I am not sure of the byte representation:

• it could be some Win1252, for the C7, but the euro char is 80 in 1252, while the 20AC seems to the U+20AC unicode char and not the E2 82 AC utf-8, and why 20AC while unpack should show bytes?
• the "Ç foo" part is not displayed identically with that additional character

Forcing the data with encode_utf8 seems less surprising

parser is XML::LibXML::SAX::Parser
file: utf8-2.xml
characters for elt: Ç foo €
bytes for elt: C3 87 20 66 6F 6F 20 E2 82 AC
SV = PV(0x2991768) at 0x243ade8
  REFCNT = 1
  FLAGS = (PADMY,POK,IsCOW,pPOK)
  PV = 0x2c1fc98 "\303\207 foo \342\202\254"\0
  CUR = 10
  LEN = 12
  COW_REFCNT = 1
[download]

While I still do not understand the missing UTF8 flag...