When formated as internal partition:
/data is used to install programs
/sdcard (/storage/emulated/0) points to the sdcard.
/data/media won't be used.
When formatted as external:
/data is used to install programs
/sdcard (/storage/emulated/0) points to /data/media
/storage/emulated/UUID points to the sdcard
Since /data is a partition and /data/media is just a dir within the data partition one of the advantages of internal formatting is to split the storage between apps and app data.
The implementation bits differ from OEM to OEM. I'm talking here about modern Likebooks. Other android vendors can have different partitions for /data and internal storage. In that case formatting the sdcard as the internal partition means you cannot repurpose internal storage for anything else (unless you're rooted, but even then only root apps can access that partition).
About sdcards as external storage. There's two standards: SDHC(fat32, up to 64GB) and SDXC (exfat, up to 2TB). But again, the implementation of this is a mess because it doesn't talk about the support of the sdcard itself, but the support of the host device that access to the sdcard.
But, to make things simpler: if you buy an sdcard announced as SDXC it should be formatted in exfat. If you use it on a android device that has no support for exfat then the OS will ask you to format it.
As the whole specs are used mainly in embedded devices (consumer cameras, for instance) some things don't really hold in android, so you can buy an SDXC card and format if as fat32, and should work as long as you don't hit the limits of the filesystem.
But yeah, it is a mess. Some vendors announce support for sdcards up to 1TB, which are not technically SDXC, and way over SDHC. And, even worst, if your device doesn't support exfat the only standard it mets is SDHC and anything beyond 64GB are just vendor promises.
In my experience all cards formatted as fat32 should be able to handle 128/256/512GB, but if they don't work the vendors are really covered as they don't announce SDXC support by skipping exfat support.
I do hope something of this makes sense to you
