The collation option determines the way ordering in the database is done. In languages that use special characters, for instance the German umlaut, the database collation determines the sorting order. If you don't know which collation you need, select the "utf8_general_ci" as most languages use this. The other collations listed are exceptions in regards to the general collation. If your language is not listed in the list of collations it most likely means that "utf8_general_ci is suitable.

Within the installer you will find a wide collection of languages. The installer currently supports the following languages: Arabic, Bulgarian, Bengali, Czech, Danish, German, Greek, English, Spanish, Finnish, French, Hebrew, Devanagari(India), Croatian(Croatia), Magyar (Hungary), Italian, Malay,
Norwegian bokmal, Dutch, Portuguese(Brasil), Portugues(Portugal), Romanian, Russian, Serbian, Svenska, Thai and more are being added.

By default the English language is installed for the back and front-ends. You can download the language files from the Joomla! extensions site. In addition some translation teams are offering fully localised versions of the entire package. Please check the Joomla! help site for links to locations where languages and localised versions can be found.