<p>I haven't found an answer to this particular question; perhaps there isn't one. But I've been wondering for a while about it.</p>

<p>What exactly causes a binary file to display as "gibberish" when you look at it in a text editor? It's the same thing with encrypted files. Are the binary values of the file trying to be converted into ASCII? Is it possible to convert the view to display raw binary values, i.e. to show the 1s and 0s that make up the file?</p>

<p>Finally, is there a way to determine what program will properly open a data file? Many times, especially with Windows, a file is orphaned or otherwise not associated w/ a particular program. Opening it in a text editor sometimes tells you where it belongs but most of the time doesn't, due to the gibberish. If the extension doesn't provide any information, how can you determine what program it belongs to?</p>

The display looks interesting, because a binary file can contain non-printable characters. It is up to the displaying program to replace such characters with something else.
This can be prevented by using a hex editor. Such a program displays each byte from the file as its hexadecimal value. That makes for a nice tabular view of the file, but it is not easy for the average person to decipher this view, because we are not used to look at data that way.
There are a few ways to find out what program a file might belong to. You can look at the beginning of the file and with some knowledge, you might recognize the file type. There are some types that begin with the same characters (RAR, GIF etc.). For other types it might not be as easy.
In Linux you can use the "file" command to help you determine file type. There are probably programs for Windows that will do the same.