What is the difference between website localization and website translation?

Translation is just one part of localization, which might include currency, time/date format etc.

Localization’ relates to the act of modifying a product or message to make it both usable and suitable to a target market. Website localization in our case refers to the process of taking English, western-orientated, website and molding it to conform to a Japanese audience.
A typical site of companies that enter the Japanese market gets translated by a translation company. This means that their site which is supposed to show their effectiveness and understanding of a particular market is getting translated into Japanese by a person that is likely outside of that industry.

Website localization is a huge investment and should not be viewed as a straightforward process. When localizing your site, ensure you get the expertise of both a website designer and a cross cultural communications consultancy to ensure your site has maximum impact on the target audience.

Edit (Moderator): URL Removed.

go to yahoo.com and you will find it.

The translation is the act of transforming a message from one language to another. To be clear, the mission of a skilled translator is to do so in a way that makes the content in the target language "read" as though it was written in that language from the start. That's ideal. This is why word-for-word translations, or even sentence-by-sentence translations, don't work.
Localization starts to muddy the waters a bit around things like language variants (ie: Canadian French, UK English, Brazilian Portuguese, etc) -- speaking to "locales". It also typically means the proper formatting of numbers, dates, time, quote marks, etc