I'd like to clear some terminology and hope that it will help the discussion.
Individual WordPress Sites
If you install several individual WordPress sites, one in each directory, or domain, you'll be running the languages completely independent. Some people do that, for example:
This is good when the sites are not translated, but contain completely different content, in each language. Mashable has different writers and editors per language and the fr version is run independently.
You can achieve the same using a multisite install. Each site will server a different language, but they're not connected. Using multisite, you can use different language folders or subdomains. To put content in completely different domains, use a plugin like Domain Mapping:
A multisite install uses one database, but it really works like a set of independent sites. Different sites feel like they're completely separate and translations will not be interlinked.
There are a number of multilingual plugins for WordPress. All these will let you run a multilingual site from a single database. These plugins will not translate for you. You can do the translation, or use a translation service.
How to Choose
Different multilingual plugins work in different ways. WPML, which I am responsible for, puts translations in different posts/pages. Other plugins, like qTranslate or Polylang, put all translations in the same post and separate languages using meta tags.
Of course, everyone will tell you that his approach is best. I'll leave that to you to decide.
Some plugins are free. WPML costs money. If you're running a business with zero budget, a free solution is great. One of the reasons people like WPML is that we can dedicate so much resources to development, QA and support. From several years of experience, I don't see how this can be possible without revenue.
I hope that this helps. I'm subscribed to this thread and will try to answer any questions that come up.