"Ö", or "ö", is a glyph which represents either a letter from several extended Latin alphabets, the letter O with umlaut, or a letter O with diaeresis.
Letter Ö
The letter Ö occurs in the Finnish, Swedish, Icelandic, Estonian, Hungarian, Sámi, and Turkish alphabets, where it represents the vowel sound .
It is collated as an independent letter, usually by placing it at the end of the alphabet. Note that unlike the O-umlaut (see below), the letter Ö can not be written as "oe".
O-umlaut
A similar glyph, O with umlaut, appears in the German alphabet. It represents the umlauted form of o, resulting in [œ]. The letter is collated together with O. The letter also occurs in some languages which have adopted German names or spellings, but is not a part of these languages' alphabets.
In other languages that do not have the letter as part of the regular alphabet or in limited character sets such as ASCII, O-umlaut is frequently replaced with the two-letter combination "oe".
O-diaeresis
O with diaeresis occurs in several languages which use diaereses. In these languages the letter represents a normal O, and the pronunciation does not change.
Typography
Historically O-diaeresis was written as an O with two dots above the letter. O-umlaut was written as an O with a small e written above: this minute e degenerated to two vertical bars in early modern handwritings. In most later handwritings these bars in turn nearly became dots. The origin of the letter Ö was a similar ligature for the digraph "OE": e was written above o and degenerated into two small dots.
In modern typography there was insufficient space on typewriters and later computer keyboards to allow for both an O-with-dots (also representing Ö) and an O-with-bars. Since they looked near-identical the two glyphs were combined, which was also done in computer character encodings such as ISO 8859-1. As a result there was no way to differentiate between the different characters. While Unicode theoretically provides a solution, this is almost never used.
The HTML entity for Ö is Ö. For ö, it is ö (Mnemonic for "O umlaut").