Just like Static Pages and Content files, some Plugins support translations out of the box. Try the installing RainLab.Forum plugin to see how the Forum channels can be translated.
Every part of this theme can be translated to another language. Even this content you are reading now!
The drop-down in the main menu is called a Locale Picker. It lets you quickly switch between any of the available languages when browsing this website.
For help on setting up more languages, close this popup and click the Languages menu item.