"Linux" as such, does not do this. Applications (including, but not limited to, terminal emulators) do that—or do not.
The Linux console terminal is a terminal emulator which may/may not interpret UTF-8. See the
console_codes(4) manual page for more information. That should list the controls for switching the output character set, e.g.,
ESC % Start sequence selecting character set
ESC % @ Select default (ISO 646 / ISO 8859-1)
ESC % G Select UTF-8
ESC % 8 Select UTF-8 (obsolete)
but seeing that the final comment on the page corresponds to this change in 2006, suspect that the conversion to web format lost some text. Another site gives a more complete representation (though that site also has issues as mentioned here).
If you really want to read the manual page, your local computer likely does a better job than either...
You can turn UTF-8 mode off/on, using the sequences ending in
G, respectively. I use this script occasionally to do that:
# send character-string to enable UTF-8 mode
if test ".$1" = ".off" ; then
(and having commented on that before, someone reminds that there is a script to do this, which is a little older than my script).