Why does the foreach statement not change the element value?

You're changing the iteration variable c. That doesn't change the contents of the array. The iteration variable is just a copy of the array element. If you want to modify the array, you need to do so explicitly:

for (int i = 0; i < array.length; i++) {
    if (array[i] == 'o') {
        array[i] = 'a';
    }
}

Your original code is equivalent (as per section 14.14.2 of the JLS) to:

for (int i = 0; i < array.length; i++) {
    char c = array[i];
    if (c == 'o') {
        c = 'a'; 
    }
}

Changing the value of a local variable will never change anything else - it just changes the local variable. The assignment:

char c = array[i];

copies the value in the array into a local variable. It doesn't associate the local variable with the array element perpetually.

c's value is a copy of the value in array. Access array directly to change the value in question.

You variable c gets changed, but not the array contents. To change the array, don't use c, manipulate the array directly.

for(int i = 0; i < array.length; i++)
{
 char c = array[i];
 if (c== 'o')
     array[i] = 'a';
}

This is because c = 'a' is assigning a to the local variable c which is not referencing the actual value present at that index of the array itself. It is just containing a copy of the value present at the specified index of array. So the change is actually made in the local variable not in the actual location where array[i] is referencing.. If you want to change value you should use the following indeed:

int i = 0;
for(char c : array)
{
 if (c== 'o')
     array[i] = 'a'; 
  i++;
}