Internal DNS is your local DNS server. So when your computer makes a query for an address, it consults its internal DNS service. If the internal DNS service doesn't have the address, for most people their computer checks the router's database. And if the router's database doesn't have the address, then it'll check the external DNS server (so Google or Cloudflare or whoever). Regardless, it's an invisible process for most people.

It's just some tech-heads set up their own internal DNS servers for various purposes (eg, to kill ads, filter out some sort of material, etc.). It requires a bit more effort (in most cases), but gives you more control.