When you sign a contract with an American publisher, you will typically grant them the right to publish your book in the English language rights in the United States and Canada, English language rights throughout the world, or in all languages throughout the world.
In order to determine what rights you should grant, and at what price, you first need to know what the book's potential is abroad. There are a couple of ways to go about learning this, from Publisher's Marketplace to Amazon, but really this is an area where you should rely heavily on your agent for guidance. Still, I'm going to try to provide a brief breakdown of the foreign language marketplace, starting with Western Europe.
Bestselling commercial fiction and acclaimed literary fiction does well throughout Europe (as they do everywhere), but crime, romance, romantic suspense, self-help, and popular psychology all have followings. Nonfiction is generally a tougher sale, as publishers would prefer to have their own journalists write on the subject.
For many years the German language market was the most lucrative translation market for U.S. titles. Unfortunately, over the past ten years the market has slowly shrunk, with both the number of translations and the sizes of advances decreasing.
France and Italy are comparable markets, in that they are both quite unpredictable. The French readership is generally open-minded, which is why you see less traditional genres and themes finding a home (for example, gay and lesbian, Native American, and African American subjects).
Children's books, and in particular middle grade and young adult, have increasingly been translated abroad, with the French and Germans leading the way. Middle grade in Scandinavian countries also does quite well. Unfortunately, the picture book market in Europe is rather limited, with the exception being France and Germany.