A transcript is easier to read, search, translate or paste into a document without the numbers and timestamps. Subtitle files are one of the cheapest sources of a transcript, since the dialogue is already split into short readable lines in order.
The text is read as UTF-8 or UTF-16, whichever the file is. An older file in another code page is read using the charset it declares, or as Windows-1252 if it declares none, so accented letters in an unlabelled legacy file can come out wrong. A file that is not text, such as the picture-based subtitles of a DVD, is refused instead of being converted to nonsense. The result is a transcript with one cue per line, without times; a cue's own line breaks become spaces.