Some encodings are stateful; they have bytes or byte sequences that switch the meanings of the following bytes. Simple encodings, like mixed-byte EBCDIC, use Shift-In and Shift-Out control characters (bytes) to switch between two states. Sometimes, the bytes after a Shift-In are interpreted as a certain SBCS encoding, and the bytes after a Shift-Out as a certain DBCS encoding. This is very different from an MBCS encoding where the bytes for each character indicate the length of the byte sequence.

The most common stateful encoding is ISO 2022 and its language-specific variations. It uses Escape sequences (byte sequences starting with an ASCII Escape character, byte value 27) to switch between many different embedded encodings. It can also announce encodings that are to be used with special shifting characters in the embedded byte stream. Language-specific variants like ISO-2022-JP limit the set of embeddable encodings and specify only a small set of acceptable Escape sequences for them.

Such encodings are very powerful for data exchange but hard to use in an application. Their flexibility allows you to embed many other encodings, but direct use in programs and conversions to and from other encodings are complicated. For direct use, a program has to keep track not only of the current position in the text, but also of the state--which embeddable encoding is currently active--or must be able to determine the state for a position from considerable context. For conversions to other encodings, converting software might need to have mappings for many embeddable encodings, and for conversions from other encodings, special code must figure out which embeddable encoding to choose for each character.