In the context of licenses, 'internal' refers to accounts of people in your company, while 'external' refers to people not of your company ('portal users'), mostly because they will use the application much less frequently. These types of users are exchangeable for a 1:10 ratio. See: https://www.mendix.com/editions/
An internal user is only known by the system, while an External user is somebody with a Mendix account. This account can be used over multiple applications so you do not have the hassle of syncing passwords etc.
Here is some more documentation about it: https://docs.mendix.com/mendixcloud/Different+user+logins+when+integrated+with+Mendix+SSO