I normally understand internal to mean an internal corporate application used by the employees.

correct. internal apps are usually built by developers for internal users. examples include processing refunds, updating customer information, managing user permissions, triggering batch jobs, and etc.

the goal of internal apps is to optimize tasks that are tedious and time consuming, but not too common for an off-the-shelf product to be available.

since the internal apps aren't the main product developers work on in a company, they prefer to build them quickly with minimal resources.

internal tools usually run on a server, as does Dropbase