On Unix/Linux, it is binary data without any restrictions except that each argument is zero-terminated (the typical argument is probably UTF-8 if you have set a UTF-8 locale). You'll see exactly the bytes that were put in as arguments to execlp() et. al. by the parent process.

On Windows, I believe it is Unicode converted to current codepage.

In any case I don't need to care about it since I can simply treat arguments as ASCII-extended opaque strings as described.