Long time back when a few of us used to be “demo-monkeys” for a Local Language LiveCD, the question that we often faced was “aren’t internationalization and localization the same thing ?” So, instead of trying to cook up a layman’s response, we used to have 2 slides that quoted from the gettext manual as:
By internationalization, one refers to the operation by which a program, or a set of programs turned into a package, is made aware of and able to support multiple languages. This is a generalization process, by which the programs are untied from calling only English strings or other English specific habits, and connected to generic ways of doing the same, instead. Program developers may use various techniques to internationalize their programs. Some of these have been standardized. GNU
gettextoffers one of these standards.
By localization, one means the operation by which, in a set of programs already internationalized, one gives the program all needed information so that it can adapt itself to handle its input and output in a fashion which is correct for some native language and cultural habits. This is a particularisation process, by which generic methods already implemented in an internationalized program are used in specific ways. The programming environment puts several functions to the programmers disposal which allow this runtime configuration. The formal description of specific set of cultural habits for some country, together with all associated translations targeted to the same native language, is called the locale for this language or country. Users achieve localization of programs by setting proper values to special environment variables, prior to executing those programs, identifying which locale should be used.
The rest of the manual is a fine document worth a read if the concepts appear a bit obtuse.