This feature could be described as a way to create a Joomla multi-site filtered and displayed by language, rather than a pure translation oriented site.
One could create the same site structure on a monolingual site. The difference is that the Interface as well as the display of different menus and modules would not be language dependent.

This video is a demo of what you will be able to do with this feature.

You can find a step by step tutorial of Joomla 1.7 Multi-lingual at http://multilingual-joomla-demo.cloudaccess.net.
Special thanks to Jean-Marie Simonet for creating the awesome Multi-lingual tutorial.