Internal Link Definition:
“Internal Links are hyperlinks that point at (target) the same domain as the domain that the link exists on (source). In layman's terms, an internal link is one that points to another page on the same website.”
What does Wikipedia say about Internal Links:
“An internal link is a type of hyperlink on a webpage to another page or resource, such as an image or document, on the same website or domain. Hyperlinks are considered either "external" or "internal" depending on their target or destination. Generally, a link to a page outside the same domain or website is considered external, whereas one that points at another section of the same webpage or to another page of the same website or domain is considered internal.”
What does Google Webmaster say about Internal Links?
“Although you may believe that users prefer a search box on your site rather than category navigation, it's uncommon for search engine crawlers to type into search boxes or navigate via pulldown menus. So make sure your important pages are clickable from the homepage and for easy for Googlebot to find throughout your site. It's best to create a link architecture that's intuitive for users and crawlable for search engines. Here are more ideas to get started:”
What does Bing say about Internal Links?
“Links – cross link liberally inside your site between relevant, related content; link to external sites as well”
Here is the link to the entire article. (You will need to scroll down quite a bit to read about link structure, but it well worth the read!)
Why are they important to SEO?
Internal links make it easy for your site visitors to discover the rich content within your site. With a highly structure link strategy, your site visitors may be guided through the sales process that lead them to give their email or purchase your product or service. Also, search engines like Google and Bing need these internal links to index your website.
Keep your site visitors on your page, stop or decrease your bounce rate, and develop a rich internal link building strategy.