Suppose, to create an MSI for each language, you had to maintain a separate Visual Studio project for each one. That would become a hassle pretty quickly. With WiX localization files (.wxl), you can re-use the same WiX markup, but swap out the text for each language you build. Light, the WiX linker, lets you specify a .wxl file to use.
A .wxl file contains strings for a particular language. These can be swapped with placeholders (localization variables) when Light runs, creating an MSI with language-specific text. To create a new .wxl file, right-click on your WiX project in Visual Studio's Solution Explorer and select Add | New Item | WiX Localization File.
The convention is to name each .wxl file using an IETF language tag—such as en-us.wxl—corresponding to the language it contains. Allow me to give a little more background on this naming scheme. The first half is a two-letter abbreviation of the language such as "en" for English, "fr" for French, or "es" for Spanish...