I have not been fortunate enough to play the original Assassins Creed, only Assassins Creed II and up, so I'm hoping this is answered in the original game somewhere.
In the so-called Ezio trilogy (Assassins Creed II and it's direct sequels, Brotherhood and Revelations), your player relives the memories of his distant ancestor Ezio Auditore, an Assassin that lived in Renaissance-era Italy. As you live through his memories, the Animus device automatically translates the things you hear yourself and others say from Italian to English.
However, the translation process seems a bit odd. For example:
- Everyone speaks English with an Italian accent; if you're hearing machine-translated speech, why add in an accent?
- Sporadically, words are left untranslated for no apparent reason. Some of these words are vulgarities, which I can almost understand, but the Animus sometimes fails to translate words (like "assassin") that are routinely translated properly.
- Other languages are left completely untranslated, even if Ezio speaks them fluently (e.g. a small bit of French dialogue in Brotherhood)
Out of universe, this is almost certainly done to add a bit of atmosphere, but is there any in-universe reason why it works this way?