1) Joomla 1.6 includes basic multilingual capabilities like language selection and content translation, but has limitations for more advanced multilingual sites. 2) Extensions like ZOO and ZOOlingual allow building powerful multilingual sites on Joomla 1.6 by creating content elements that can be translated and selecting the language dynamically. 3) Examples like inconto.com demonstrate how to use these extensions to build a fully multilingual site with language-specific menus, content, and templates on Joomla 1.6.