Learning to think categorically (localization of rings and modules)

In my opinion, the most enlightening (and the simplest) way to present the universal construction of localizations (and fractions) is to use instead of the pair construction the natural presentation in terms of generators and relations. This allows one to exploit the universal properties of quotient rings and polynomial rings to quickly construct and derive the basic properties of localizations (and to avoid the many tedious verifications required in the pair approach). Moreover, this approach is much more conceptual. Indeed, the pairs in the pair construction are nothing but normal forms for the polynomial terms in the presentation based approach. For details of this approach see e.g. the exposition in section 11.1 of Rotman's Advanced Modern Algebra, and Voloch's: Rings of fractions the hard way. Note: presumably Voloch's title is a joke - since the presentation based approach is actually the easiest way - in fact both Rotman's and Voloch's expositions can be simplified.

If you're just beginning to understand universal constructions then I highly recommend that you peruse the beautiful exposition in George Bergman's An Invitation to General Algebra and Universal Constructions.

You might also find illuminating Paul Cohn's historical article Localization in general rings, a historical survey - as well as other papers in that volume [1].

[1] Ranicki, A.(ed). Noncommutative localization in algebra and topology. ICMS 2002