This parameter provides defaults for all character type parameters. The legal values are cl:base-char, lw:bmp-char and cl:character. lw:simple-char is also supported for backwards compatibility.
Its value must only be set via a call to set-default-character-element-type.
This is intended for efficiency of applications with only 8-bit strings, where you can do
(set-default-character-element-type 'base-char)
and also for efficiency of applications with only 16-bit strings, where you can do
(set-default-character-element-type 'lw:bmp-char)
If your program uses 16-bit or 32-bit strings you should already be aware of these issues, and make some attempt to provide explicit types.
When the compiler does type inferencing it behaves as if this variable was bound to cl:character; if you want assumptions about types to be hard-coded into your program, you must supply explicit declarations and type arguments.
LispWorks User Guide and Reference Manual - 13 Feb 2015