Why does .net use the UTF16 encoding for string, but uses UTF-8 as default for saving files?

If you're happy ignoring surrogate pairs (or equivalently, the possibility of your app needing characters outside the Basic Multilingual Plane), UTF-16 has some nice properties, basically due to always requiring two bytes per code unit and representing all BMP characters in a single code unit each.

Consider the primitive type char. If we use UTF-8 as the in-memory representation and want to cope with all Unicode characters, how big should that be? It could be up to 4 bytes... which means we'd always have to allocate 4 bytes. At that point we might as well use UTF-32!

Of course, we could use UTF-32 as the char representation, but UTF-8 in the string representation, converting as we go.

The two disadvantages of UTF-16 are:

• The number of code units per Unicode character is variable, because not all characters are in the BMP. Until emoji became popular, this didn't affect many apps in day-to-day use. These days, certainly for messaging apps and the like, developers using UTF-16 really need to know about surrogate pairs.
• For plain ASCII (which a lot of text is, at least in the west) it takes twice the space of the equivalent UTF-8 encoded text.

(As a side note, I believe Windows uses UTF-16 for Unicode data, and it makes sense for .NET to follow suit for interop reasons. That just pushes the question on one step though.)

Given the problems of surrogate pairs, I suspect if a language/platform were being designed from scratch with no interop requirements (but basing its text handling in Unicode), UTF-16 wouldn't be the best choice. Either UTF-8 (if you want memory efficiency and don't mind some processing complexity in terms of getting to the nth character) or UTF-32 (the other way round) would be a better choice. (Even getting to the nth character has "issues" due to things like different normalization forms. Text is hard...)

As with many "why was this chosen" questions, this was determined by history. Windows became a Unicode operating system at its core in 1993. Back then, Unicode still only had a code space of 65535 codepoints, these days called UCS. It wasn't until 1996 until Unicode acquired the supplementary planes to extend the coding space to a million codepoints. And surrogate pairs to fit them into a 16-bit encoding, thus setting the utf-16 standard.

.NET strings are utf-16 because that's an excellent fit with the operating system encoding, no conversion is required.

The history of utf-8 is murkier. Definitely past Windows NT, RFC-3629 dates from November 1993. It took a while to gain a foot-hold, the Internet was instrumental.

UTF-8 is the default for text storage and transfer because it is a relatively compact form for most languages (some languages are more compact in UTF-16 than in UTF-8). Each specific language has a more efficient encoding.

UTF-16 is used for in-memory strings because it is faster per character to parse and maps directly to unicode character class and other tables. All string functions in Windows use UTF-16 and have for years.