L10N describes the process of adapting a product to a specific international language or culture so that it seems natural to that particular region, which includes translation, but goes much farther.
True localization considers language, culture, customs, technical and other characteristics of the target locale. While it frequently involves changes to the software writing system, it may also change the keyboard usage, fonts, date, time and monetary formats.
Graphics, colors and sound effects also need to be culturally appropriate. In L10N, the common abbreviation for localization, the 10 refers to the ten letters between the L and the N.