Language packages
  - Master English pack
- is primary source of all built-in texts in Moodle. It is distributed as a
  part of Moodle and plugins. It consists of PHP string files and HTML help
  files in the folder "en_utf8". All add-on plugins (modules, blocks,
  etc.) have to contain their own master English files. Master English pack
  can't be edited via lang.php.
- Master language pack
- is official translation of Master English pack. Usually, it is maintained
  by a voluntary member of the community. Master language packs for Moodle core
  can be updated automatically from admin menu under "Languages" (you will
  find a utility that allows you to select, download and install these language
  packs directly from within Moodle). They can also be downloaded manually from 
  http://download.moodle.org.
  
- Local modifications
- of master language pack are stored in separate directory on your server.
  Therefore, you can update master language pack without overwriting your on-site 
  customization.