I was reading the first answer to this question: Why should I use \usepackage[T1]{fontenc}?
[…] the default font encoding (OT1) of TeX
is 7-bit and uses fonts that have 128
glyphs, and so do not include the
accented characters as individual
glyphs. So a letter ö is made by
adding an accent to the existing 'o'
glyph. This means, among other things,
that words containing accented
characters cannot be automatically
hyphenated.
I can't see what is the relationship between the fact that a character like 'ö' has to be made from two different glyphs (the 'o' glyph and the accent glyph), and automatic hyphenation.
Best Answer
FAQ 1: "TeX’s algorithm for hyphenation gives up when it encounters an \accent command".
FAQ 2: "The candidates for hyphenation must be sequences of letters (or other single characters that TeX may be persuaded to think of as letters) — things such as TeX’s \accent primitive interrupt hyphenation."