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Directional communication (for example, using directional antennas or free-space optics) has the potential to dramatically increase capacity reuse in multi-hop wireless mesh and ad hoc networks. What is less appreciated is that directional communications can also simplify network layer functions. In this paper, we show how directionality (combined with ranging) can be used to construct a scalable, fully distributed localization system and assign "relative" coordinates to each node (without the need for GPS) that can be used by highly scalable geographic routing systems. We show that range and orientation-based localization schemes (ROL) scale better than range-only or orientation-only localization schemes (e.g., triangulation) for such applications. We present simulations studying scalability, effect of errors (both range and directionality) and compare performance with triangulation methods. Finally, we discuss how such an ROL scheme can be realized with optical wireless nodes, based upon our ongoing efforts to build ad hoc and meshed networks using both FSO and RF technologies.