locale is a column on the sitetree table in the database that is added once you add the translatable extension to sitetree.. $locale would insert the contents of the locale column in a record into a template, but you could also insert stuff from php functions (like $Link) to dump a page link into its template. this is covered really nicely in the tutorials (there are 5 main tutorials that really get people started here but if you want to see a standard list of built in page controls (mainly from the SiteTree or ContentController classes) look here.

i think translations is a control block that returns all the pages (subclasses of SiteTree) in the current page's translation group. you can then call any function in the Page / SiteTree class once you're in the translations control block.

hope it helps.
-Chris