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$Language is a list of strings which give the names of languages to use for messages.
All language names are conventionally given in English, and are capitalized, as in "French".
When a message with a name s
tag is requested either internally or through the Message function, Mathematica searches for messages with names s
corresponding to the entries "
" in the list $Language. Only if it fails to find any of these messages will it use the message with the actual name s
See the Mathematica book: Section 2.8.22, Section 2.13.1.
See also: MessageName.