Today most of the confusion of what is external vs what is internal mostly come within the internal camp. The definition itself is actually very simple and straightforward: if we flip through any Chinese language encyclopedia-type work on Chinese martial art, we would see under entries for each style what major type of physical motion is used, and the types of Jin (trained force) used.
All martial art are about generating forces and using them on the opponent to get some desired effect (injury, death, immobilization, compliance...). These trained forces can be broadly categorized into external and internal. External means you can understand everything about a skill just by seeing it. On a basic level, most of us can understand what a jab is very quickly, here the challenge is can you punch as hard as Mike Tyson.
Internal, by definition is not something that is easy to see. Here the movement are tiny and subtle. Internal Jin need to be experienced in person over and over again. Hence the emphasis on lineage in internal martial art - without a good teacher, there's little chance the student would even understands what he or she is supposed to train for. You never see external people have debates, questions about basic things like internal people do. Today because we don't need to fight emptyhanded, there is a general disengagement between practice and fighting. And for the practitioners, debate lingers because there are simply no consequences for being wrong. There is no real world feedback. So today especially, the challenge is understanding what internal skill is in the first place.
Internal martial art are called that not because they only use internal Jin, and that external martial art don't use any internal Jin. It's a spectrum. Wrestling uses a lot of internal Jin, Qin na even more so. No single, or single type of Jin can do everything - External jins are better for striking, internal better for control. Internal martial arts are called that because the emphasis is on gaining control using internal Jin first before finishing with external Jin.
In the end there can be no jin without physical movement. And since many internal martial art movements (ex. single whip) come from external martial art, it's common to see internal people fighting using not just physical movements from external martial art, but jin as well, and not using any internal jin. This is what people mean when they say "so and so is not internal". People can still win this way if they're faster and stronger than the opponent. But against someone who is equally good, this can make the internal person look really bad. For example, in Bagua lots of people think the physical movement they can see is all there is to the skill, so when crossing hands with opponent they try to directly circle behind the opponent. Very quickly they find out this doesn't work - if a good opponent is always at the center of the circle, he can react and adjust to any movement we make on the outside of the circle with a fractionally smaller movement. This is because unless during that initial contact we used control skills to change the existing centerline to one where we're at the new center, we have no chance to sneak behind him. All IMA skills comes from control. Without control many of the pure internal skills cannot even work...
More info:
http://www.ycgf.org/Articles/TJ_Jin/TJ_Jin1.html