One difference here is that Japanese characters can be combined in various ways to create different words, so the 777 characters can be used to create many more than 777 words. Compare with the Simple English Wikipedia which strives to use only the 1000 most commonly used English words. I think you'll find that that experience quite a bit different from reading a typical English language newspaper.

https://simple.wikipedia.org/wiki/Wikipedia:Simple_English_W...

Another example of "using only the ten hundred words people use most often" is Randall Munroe's "Up Goer Five":

https://xkcd.com/1133/

It may be helpful to think of "characters" as representing some middle ground between words and alphabetic letters, a little like word stems.