To add to Lennart Regebro's answer There is even the third way that can be used:

encoded3 = str.encode(original, 'utf-8')
print(encoded3)

Anyway, it is actually exactly the same as the first approach. It may also look that the second way is a syntactic sugar for the third approach.

A programming language is a means to express abstract ideas formally, to be executed by the machine. A programming language is considered good if it contains constructs that one needs. Python is a hybrid language -- i.e. more natural and more versatile than pure OO or pure procedural languages. Sometimes functions are more appropriate than the object methods, sometimes the reverse is true. It depends on mental picture of the solved problem.

Anyway, the feature mentioned in the question is probably a by-product of the language implementation/design. In my opinion, this is a nice example that show the alternative thinking about technically the same thing.

In other words, calling an object method means thinking in terms "let the object gives me the wanted result". Calling a function as the alternative means "let the outer code processes the passed argument and extracts the wanted value".

The first approach emphasizes the ability of the object to do the task on its own, the second approach emphasizes the ability of an separate algoritm to extract the data. Sometimes, the separate code may be that much special that it is not wise to add it as a general method to the class of the object.