Manual:$wgDBmysql5/en

Details
Note beforehand: No matter what you set here, MediaWiki internally always uses UTF-8 encoding. Everything MediaWiki sends to the database is always in UTF-8 encoding.

Set to true to send 'SET NAMES=utf8;' on connect. If set to false, 'SET NAMES binary;' will be used, which is the default and so recommended. Generally you should not change this value once installed -- if you created the wiki in Binary or UTF-8 schemas, you should keep this off. The feature is experimental and with your settings the data is sent (and so also finally saved) with the right encoding anyway.

(See also which in recentish versions will include the table type and character set used when creating tables.)

May break if you're upgrading an existing wiki and then change this setting. Symptoms of brokenness are likely to include incorrect behavior with page titles, usernames, comments etc containing non-ASCII characters. Might also cause failures on the object cache and other things.

If you are still using MySQL 4, your wiki was created with the old "MySQL 4 backwards-compatible UTF-8" schema and $wgDBmysql5 should stay off; your MySQL version does not support it anyway.