As per every modern software, Pentaho Reporting is developed following all the best practices and patterns to support internationalization, so that it can be adapted to various languages, and regions without engineering changes.
Localization is the process of adapting internationalized software for a specific region or language by adding locale-specific components and translating text. Localization (which is potentially performed multiple times, for different locales) uses the infrastructure or flexibility provided by internationalization (which is ideally performed only once, or as an integral part of ongoing development).
Note
This description is mainly a quotation of the Wikipedia definition of internationalization and localization that you can find at https://en.wikipedia.org/wiki/Internationalization_and_localization. Even if the description is quite generic, it fits perfectly with Pentaho Reporting being developed as a standard (and modern) Java application...