The auto-translating device does the translations directly inside the person's head. Since you can't naturally upgrade the brain's storage capacity it overwrites memory space when you've been listening to people for too long.
The Divine Spirit are mostly likely are there to clean the translation space before it gets too full and starts affecting memories again.
I know that all of the chapter translations have been problematic so far, but it's especially unfortunate that a chapter about translating languages would be hard to follow because the translation isn't great.