And to put it in a simple example- if the Chinese had invented and owned the internet...all urls might be in CHINESE! So if you wanted to access the internet, hypothetically you might have needed to translate your "term" to Chinese to input it. The url is CHINESE but the site content is ENGLISH. Now reverse this to English urls, with Chinese content.
Right now, the majority of internet users can only access their foreign language websites by putting in an English url. With IDNs they can put in (native language) urls, which convert to punycode- the "system" developed to convert and assign letters and numbers to various scripts and languages.
Cut and paste this into your (google bar) browser: &
#37329;&
#23376; (Chinese for gold as translated by Systran online dictionary) and take a look at the "parallel universe of domaining". You will notice that ALL urls are English, but the content is Chinese.
85% of the world doesn't speak English, but has been forced to work with English urls. That has hampered advertisers and branding. With Internet Explorer 7 is coming on line, it will allow the IDN system to be implemented and people to remember website domain names in their own language. Over the last 4 months it has been a virtual gold rush of registrations of the "best" keywords and generics. There are still lots out there, but you have to work harder to get them. Hope this helps.