Database Character Set latin1 and Collation latin1_swedish_ci

I am making a copy of my database to use as a testing server.
1) Do you prefer to have your testing server local or actually on the server
2) My current settings are
Database Character Set latin1
and Collation latin1_swedish_ci

Everything is working so I assume I should keep it the same but I am really attempting to ensure I understand the how's and why's or at least get a confirmation that my environment is set up optimally.

I seldom use a local testing server. I usually just use my remote server as my testing server and maybe create testing pages or a testing folder.

I like to use a utf8 collation to support special characters.

My database is currently set to Character set latin1 and Collation latin1_swedish_ci

I am looking for optimal settings which support special characters.

With the Character Set at latin1 there are no utf8 Collation options, so I assume I change the Character set to utf8

Then the following options in screenshots are available
Of these I am guessing I should use one of these but I would like to know rather than guess:
utf8_bin, or utf8_general_ci, utf8_general_mysqli500ci,

I use: utf8_general_ci

But I'm not that educated on what all the different options are for. The one I use seems to support all special characters.