The translations are most definitely not perfect but they are often enough to get the gist of what is written. There are two modes, one in which it will "live" translate whatever the camera is currently pointed at and one in which you take a picture and it analyzes it. I usually use the "live" translate option.
As to the offline translation files you will want English and Japanese for sure. There are others that you can install if you may need to translate other languages.
Just a note, it does not do well with stylized script and generally doesn't even consider it as something that can be translated.