First, it might be helpful to make the distinction between translating a work and localizing it. Localization involves dealing with the surrounding context as well as translating a text. Think of Lion King as compared to Hamlet. It's the same story, but you can't switch out the lines one-to-one. There are a variety of reasons that a commercial product might be cheaply localized, but a not insignificant part of that is due to how games are structured internally that makes it more difficult to change than say, translating a book or adding subtitles to a movie for foreign audiences. Western games of the early 80s home computers like the C64 were similarly light on text for similar reasons.

Cartridge-based video games, and NES games in particular, had one very important limitation as to what you could include: storage. Super Mario Brothers, all 32 levels, the graphics, and game physics, is less than 32 KB in size, far less than a 200px by 200px image would be today. This meant that the original programmers would be trying to save as much room as possible so they can avoid cutting that extra enemy or level feature. Features would be hard-coded and hand-coded to accomplish this, and that made the game fragile for lack of a better term. You can see that in infamous glitches of the era like the Minus World or Pokemon's Missingno glitch. One common theme in a lot of these glitches is that players do something unexpected or that isn't normally possible, so incorrect flags are set that trick the game into pulling garbage data from the wrong place. You can find 151 Pokemon in game, but if you ask the game for monster 152, it can't tell that those bytes are supposed to be an attack name and not a new friend to find. All this is to say that storage is important when you have to pay for every little bit. CDs, cheaper memory and faster processors freed up programmers from having to manually map information to dumb lookup tables, and made it easier to verify the type of information you were passing along.

In the original Final Fantasy, spell names were limited to only 4 characters, because each Japanese haracter is more information dense and can explain to a player that a spell causes instant death, while an English speaking player might be confused what RUB does without a guide to tell them. You can't just make the name longer, though; that would require remapping all the other text that got pushed down a little bit further in the data, and you dont have the extra room anyways, and besides that the screen only fits 4 letters anyways so what's the point? Once again, modern games have conveniences like Unicode that help standardize things across regions but back in the NES days you were drawing each letter as a separate sprite to be pulled up via a lookup table in the first place, so any character you didn't need you just didn't include. Dialog was less impacted than functional text in this way but still didn't have the space to fully communicate everything in the original text. This is beyond my area of expertise as it delves into cultural differences, but Legends of Localization has a good number of articles specifically about trying to localize Japanese text, such as dialects, stereotypical vocabularies, and the infamous systematic politeness. Ted Woolsey, the primary translator for Square's SNES RPGs and father of many notable lines in said games, mentioned in a 2007 interview that up to 25% of his original translated scripts had to be left off the testing cartridges due to space issues, for what started as a fully functional game in Japanese.

A final aspect of localization is internal censorship. Nintendo was most notable for this, restricting all alcohol and religious references for any game published for their systems in the US. Their marketing strategy for the NES was to be seen as a toy and not as a computer like the name "Famicom" implied. This made it tougher for localizers as whole concepts couldn't be touched and they had to write around it with their already limited space. This censorship at least led to "Woolseyisms" like FF4's "spoony bard" line.