This addon is a locale. You need to extract it to your /locales folder to install it. For more help with locales check out the help topic here.
Important: This is a work in progress translation! The frontend is almost completely translated (except some system messages). Some things cannot be translated now as they are still hardcoded (e.g. "Terms of Service"). Fell free to help changing this in github.
You have to activate the translation in your dashboard (dashboard => general). This "just" activates what is in the definitions.php. For now most of the translation is stored in the locale.php that you can take as a blueprint for other translations as well.
Attention: When you update Vanilla 2 to the latest github release, be careful not overwriting your locale.php!