The following is a Plus Edition article written by and copyright by Dick Eastman.
Genealogists have used Soundex almost since it was invented in 1918. Soundex was patented by Robert C. Russell of Pittsburgh, Pennsylvania and is sometimes called the “Russell Code.” The U.S. Census Bureau immediately adopted Soundex for indexing census records. Since then, others have used Soundex code to sort similar-sounding names for telephone books, work records, drivers' licenses, and many other purposes. Genealogists use Soundex to find variant spellings of ancestors' names. Almost all modern genealogy databases have a "search by Soundex" capability.
Soundex is a form of "phonetic encoding" or "sound-alike" codes. A Soundex code consists of one letter followed by three digits. Smith and Smythe both are coded as S530. Eastman is E235 and Williams is W452. You can read more about Soundex in my Soundex Explained article at http://goo.gl/zBXxF.