Localisation includes the translation of the user interface, on-line help and documentation, and ensuring the images and concepts are culturally appropriate and sensitive. There may be subtle cross-cultural considerations, e.g. do the icons make sense in other parts of the world?
Internationalisation is the process that occurs during application development that makes localisation easier by separating the details that differ between locales from the rest of the program that stays the same. If internationalisation is thorough, localisation will require no programming.
The abbreviation l10n means "L - 10 letters - N".