Unicode is a format which can simultaneously encode characters from languages across the world: Arabic, Chinese, Greek, Hebrew, Japanese, Roman, Russian, and a host of others. Cocoa text objects can accept Unicode input, so TeXShop can as well. To experiment, open the International preference in the System Preferences program, choose the Input Menu tab, and add additional selections to the items already selected. It is illuminating to select Greek (because it is familiar), Hebrew (because it is written from right to left), Arabic (because it is written from right to left and makes extensive use of ligatures, so characters have different shapes at the ends of words than in the middle) and Chinese. A new menu item will appear with a flag indicating the current input language.
Type some characters, switch to another language, and type some more.
Some languages, including Arabic, Hebrew, and Persian, are written from right to left. Cocoa understands this; text written in these languages is inserted from right to left. If extensive text in these languages is included, it is common to justify the text to the right. TeXShop has a special preference to activate this behavior, labeled "Arabic, Hebrew, Persian." If this item is activated, then lines of source text which contain characters in Arabic, Hebrew, or Persian are right justified, while other lines are left justified. This behavior requires that syntax coloring be activated. TeX itself has other justification commands, so the justification in the source is not passed on to TeX.
There are several formats for Unicode files. A preference item allows users to select two of them. Standard OSX Unicode is the usual code used by Mac OSX, but I do not know if this is useful in the TeX world. UTF-8 Unicode is a popular format because ordinary ascii characters appear as they usually do. If a file is saved in UTF-8 format, TeX can process it, but it will convert Unicode characters to question marks.
There is a TeX package which accepts UTF-8 Unicode input files; see