WordPress uses the GNU gettext localization framework to provide localization infrastructure. The most important thing you need to know about it while internationalizing your plugin is that gettext uses message-level translations—each message might be a single word, a phrase, or several sentences. There are two primary localization functions that you will be using:
__($message)
This first function searches the localization module for the translation of $message, and passes the translation to the PHP return statement. If no translation is found for $message, it just returns $message.
_e($message)
The second function above is shorthand for echo __().
These function names are hardly descriptive, but they are easy to use because they are so short. There are a few other related functions, too, but these two are the most important.
The basic idea here is truly simple. Scan through your plugin for messages that are displayed to the user, and wrap them using the functions above...