The motivation here is that If you have two groups
N1 and
N2 sitting on your desk, then you can form their external direct product
G; you seem comfortable with that.
On the other hand, what happens if you have a group
G wandering around the office and you wonder to yourself whether it is isomorphic to some external direct product of two groups? This is where the internal direct product comes in. If you can find two normal subgroups
N1 and
N2 that satisfy certain properties (their intersection is trivial and their product is
G), then
G is the internal direct product of
N1 and
N2 and
G is isomorphic to the external direct product of two groups isomorphic to
N1 and
N2.
So, basically, they are two different ways of looking at the same thing? Nearly. For the product of two groups, or for the product of a finite number of groups, the notions correspond. But if you were to start off with an infinite family of groups, then things become trickier and the correspondance between external and internal direct product doesn't go through in the same way. (It can be rescued, though, with some careful definition!)