An internal conflict is one that happens within the mind of the character in a story. Usually internal conflicts deal with some sort of decision or choice the character must make or an emotional struggle that must be resolved. Many famous short stories, plays, and novels include internal conflicts. For example, in the play Macbeth, the central character Macbeth struggles with the decision whether or not to kill King Duncan; then afterwards, he feels so incredibly guilty that he becomes paranoid. Another great example of internal conflict is Poe's classic short story "The Tell-Tale Heart," in which the unreliable narrator imagines himself to be tormented by the beating heart of his murdered roommate.
It is the struggle occurring within a character's mind. It is usually an ethical or emotion conflict when it comes to internal conflict. It is the psychological struggle within a mind of a character.