The collation option determines the way ordering in the database is done.

Within the Installer you will find a wide collection of languages.

Translation Teams for Joomla! 1.5 may have also released fully localised installation packages where site, administrator and sample data are in the local language. 

Yes! Prior to Joomla! 1.5, only the text values of an Article and only for ISO-8859-1 encoding was allowed in the PDF rendition. 

A lot of different languages are available for the Back-end, but by default this language may not be installed.