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The tittle (dot) on the letter i of the Latin alphabet originated as a diacritic to clearly distinguish i from the minims (downstrokes) of adjacent letters.
Diacritical marks may appear above or below a letter, or in some other position such as within the letter or between two letters.
Usually ä is sorted as equal to æ (ash) and ö is sorted as equal to ø (o-slash).
Also, aa, when used as an alternative spelling to å, is sorted as such.
With the advent of Roman type it was reduced to the round dot we have today.
Different languages use different rules to put diacritic characters in alphabetical order.
In some cases, letters are used as "in-line diacritics", with the same function as ancillary glyphs, in that they modify the sound of the letter preceding them, as in the case of the "h" in the English pronunciation of "sh" and "th".