I'm not an expert on this, so I cannot exactly explain how it works and why it works and stuff. But since nobody gave you satisfying answer on your second question sofar, I try to contribute myself. So, I guess I have a solution if your concern is using German. If you also want to use the Greek alphabet or math symbols and stuff, then I am afraid, this cannot work without LuaTeX or something similar that supports Unicode.
This problem is solved in the Czech-Slovak distribution of TeX, which, if I understand it corretly, has its own slightly modified fonts and internally it transforms the utf8 input into iso8859-2 coding, where all the Czech, as well as German, characters appear. See https://www.ctan.org/pkg/csplain
You can write, for example
Příliš žluťoučký kůň úpěl ďábelské ódy.
„Fix, Schwyz!“, quäkt Jürgen blöd vom Paß.
And after compiling using
pdfcsplain instead of
pdftex, you get the right result.