I don't have any experience with game localization but on the software side of things, I feel like the biggest challenge is keeping the UI intact. In the original language you might have three equally sized buttons neatly next to each other, but then in the localized version one of the buttons needs far more characters than the original to convey the same meaning. What do you do in that case? Make one button wider than the others? Looks ugly. Make all of them wider? They might not fit on a single line anymore. Move one to the next line? Now the whole UI grows taller.
Obviously, this is much less of an issue if the software is designed from the ground up with localization in mind and the UI already accounts for the possible differences in text length.
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