Languages are perhaps the most basic and critical extension type. Languages are packaged as either a core language pack or an extension language pack. These packages consist of INI files which contain key/value pairs. These key/value pairs provide the translation of static text strings within Joomla! source code. This allows both the Joomla! core and third party components and modules to be internationalised. Core language packs also include an XML meta file describing the language and providing information about the fonts to use for PDF content generation.

Reference: http://docs.joomla.org/Glossary

A file that stores configuration setttings which you will find in the root folder of Joomla installation. All the parameters under the Site, System and Server tabs in the Global Configuration are stored as values in this file. This file is set up automatically by the software installation process and thus many of the parameters appearing in the Global Configuration screens are best left as their initial settings.