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When people have this argument, this is what they're commonly referring to:

Translation: The language is straight up translated, is not punched up, is not "Americanized", and is solely focused on conveying the meaning of each sentence from Japanese to English.

Localization: After being translated, work goes into making the translation more fine-tuned for the intended audience. Specifics may be disregarded and words and meanings may be changed in order to appeal more to the intended audience. This is often done to strip the work of its foreign feel, sometimes making complete changes. This can be done to wildly different degrees, from only making changes to jokes that don't make sense in the target language, to fully modifying plot points, names, items, and so on.