Creating Table:
CREATE TABLE test (
charcol CHAR(10),
varcharcol VARCHAR2(10));
SELECT LENGTH(charcol), LENGTH(varcharcol) FROM test;
CHAR type has fixed size, so if you say it is 10 bytes, then it always stores 10 bytes in the database and it doesn't matter whether you store any text or just empty 10 bytes
VARCHAR2 size depends on how many bytes you are actually going to store in the database. The number you specify is just the maximum number of bytes that can be stored (although 1 byte is minimum)
You should use CHAR when dealing with fixed length strings (you know in advance the exact length of string you will be storing) - database can then manipulate with it better and faster since it knows the exact lenght
You should use VARCHAR2 when you don't know the exact lenght of stored strings.
Situation you would use both may be:
name VARCHAR2(255),
zip_code CHAR(5) --if your users have only 5 place zip codes