Temuco, located in the middle of the country of Chile (North to South - neither in the northern dry desert, nor in the southern most area of glaciers; East to West as well - neither in the coastal area of ocean, nor in the Andean region of high altitude mountains).

Temuco itself is not such a nice place, however it's location is perfect for travelling around the country.
Temuco is the biggest city in this region of Araucania and has some problems of highly populated areas - pollution, lot of traffic and large population.
On the other hand it's a student city of many universities (Temuco Univerciudad, which works with Iaeste, itself is part of around 5 local universities). This makes it easy to meet with other students (both locals and other internationals), the atmosphere of local bars is nice and on some days there are always other students "carreteando" (having a fiesta, party). Also there is a large number of cultural events organized by these universities - concerts, movie projections (I can recommend the UFRO film club for this), etc...

This is where Temuco excels - it is very conveniently located in the middle of several very interesting places to visit.

The nearest would be the common tourist destination of Pucón and Villarrica, two cities located near a lake under a volcano "Villarrica" (also). There is a "parque nacional" Huerquehue, which is worth the visit and hike, plenty of geotermal spa's and finally a crossing to the Argentinian side, with a very close by city of San Martín de los Andes (if for any reasons you find yourself depressed from rainy Temuco, I suggest going there to clean your head on a high mountain hike :)).

Near the coast, there is Puerto Saavedra, maybe the closest place to get some "mariscos" (sea food) directly from the ocean.

If you go far to the South, there is city of Valdivia, with many Spanish colonialism era forts; Further South there is Puerto Montt and the Chiloé island. That's a very nice place to visit - I would recommend seeing Ancud, sleeping centrally at Castro and checking out the East-most national park Cucao and small western villages.

To the far North, way past Santiago de Chile, there is the dessert area Atacama with a city San Pedro de Atacama. Here I would recommend seeing the ALMA observatory (it's possible to reserve for a tour, but you have to do it really long time in advance - or just try going there on the day of the tour and hope that someone skips their reservation - on the plus side it's all for free and quite amazing.... See here: https://www.almaobservatory.org/en/outreach/alma-observatory-public-visits/ ). Similarly there is a free tour near the city of Calama of the biggest on surface copper mine in the world, which is actually quite horrifying to look at.

Finally, there are the neighboring countries - Argentina, Peru, Bolivia - all very interesting. It's possible to see it for example after the end of your internship...

My employer was the Instituto de Informática Educativa at Universidad de La Frontera.

I was working in a small team of people at IIE, which was trying to combine IT and Education. This goes both ways, so you might find yourself trying to write software to ease teaching students, or the other way around, teaching students about IT.
I found the leadership at IIE very opened to the particular skills of the intern - they are trying to find something suitable for your skills and desires.
I ended up doing several projects at IIE, some with cooperation with UFRO itself (leading a workshop classes for master degree students about Machine Learning), some with local cultural sites (doing a project with the local Museo Regional de la Araucania on photogrammetry and object digitization into 3D models) and lastly some withing IIE (trying out some ideas for projects about education).

I think that the definition of these projects is to some degree up to you - and up to your motivation to do some interesting work.

Actually not really....
Chilean life is quite expansive and local salaries are often surprisingly low. Add to it the fact that your salary won't be the biggest, because you are an intern there...
I think you might have problems even when trying to balance your expanses staying put in Temuco (with paying for food and for accommodation) and you will have difficult time. And if you would like to travel during at least some weekends (which I do wholeheartedly recommend), you will have even harder time. In that case you will probably need to have some money saved up, unless the future employments are not better evaluated financially. However I do understand the situation - it can be hard to find places with very big salary which would be opened up for interns from abroad.

Pues, espanol esta necessario...

You will need to know at least some basic to advanced Spanish. Not everyone can speak English, not even in the workplace or at the university UFRO. Some professors can speak very well and your boss might as well, however you will need Spanish to interact with your co-workers and fellow interns and other international students. (The common denomination language between all international students is therefore Spanish, not English)

The good part and good news of this fact is, that your Spanish will necessarily improve hugely here. You will be forced to use it and your language skills will get better. It is not that hard to use every day Spanish in your daily communication, all the grammatical rules and peculiar tenses are not all used here.
And finally, even if you say something horribly grammatically incorrect, they will most likely understand you, help you and try to tell you what you said wrong.

You will get help with finding accommodation - either from the international student club at UFRO (usually you will be assigned a "buddy" in their buddy system), or by someone from IAESTE.

My case was a bit more complicated, because I found out that I have severe allergies to the environment in my accommodation - so I had to (with a great help from local friends!) find another place to change into.

IAESTE Temuco works very well in helping you get accommodated - with pick-up at the bus station or at your place and journey to your work place.
I was also regularly being invited (and participating) in many events organized either by IAESTE directly, or by one of the universities.

As mentioned before, Temuco can be described as a "student city" with many universities. As such, there are multiple programs for international students. A lot of them will be from Latin America countries or from Mexico, however decent amount also comes from Europe, Asia and other parts of the world.
Events organized by UFRO, Iaeste or by other universities make it pretty easy to mingle with other students and to get to know them - it's only on you then to organize some additional trips together on the weekends...

UFRO has a good gym, which is sometimes paid and sometimes as a part of your curriculum (probably depending to your status). I was able to join a weekly gym classes which involved running around, regular exercising etc. basically exactly what I needed after sitting behind a computer for long time each day...
I recommend asking your "buddy" at the UFRO.

As a part of the initial welcoming by IAESTE members, I got shown around some places to get some local food.
This region, Araucania, has a very large proportion of German origin immigrants, which influences the local cuisine - as an Europen and Czech, I found that some foods were actually quite similar and that their locally brewed beer was also good :D.
There are also some local specialties, which are completely different to what I knew - many mariscos (sea food) dished for example.

Using local phone with data, I was able to use Whatsapp and Viber to communicate with home.

Everything I wrote in this form basically :D - I do recommend travelling around and seeing the amazing country and nature beauties. I would also recommend speaking with a lot of local students and getting out of your own cultural group (if you arrived in a bigger group that is...), it is quite interesting to do so...
Finally, relax and if Temuco feels too depressive (for example during the winter months of June/July (sic!)), just go visit a near place with a possibility to go walk in the nature / or have a small hike.

Rain coat / umbrella / stuff to protect your bag from rain

Some special food from your country to share :D

I also had my own notebook and it helped me greatly when working on some of my own projects...

Camera (if you are so inclined ...)

Many!

Seeing this part of the world, interacting with a different culture, but still being in very safe environment.
Meeting many very friendly people. Locals and other international students...
Having the opportunity to travel around (especially if you came from afar).
... etc.

As mentioned before, local branch of IAESTE works very well (in my opinion) and will help you out if you need it.