When most people hear the word “localization,” they think about language. When importing a game from overseas to the Western Market, naturally you should pay very close attention to language localization.
What is often overlooked is gameplay localization. There are aspects of gameplay that can be tweaked according to the intrinsic needs of the market you’re targeting. For example, many MMORPGs in the Asian Market focus on “grinding,” killing similar monsters over and over until your character levels up and progresses. The Western Market hates grinding, and is more objective/quest oriented. So adding more quests to ensure there are no gaps in gameplay where a user is forced to “grind” in order to progress is probably a good move if you’re publishing your game in the West.
This is one subtle example that should be replicated across your entire game. Find out who your target is and what they want, then make sure your game can deliver according to what those needs and desires are. That is true localization.