Combustion is the process of burning a fuel to generate a rapid change in temperature and pressure of a gas, so internal combustion, is the same process, but contained inside a heat engine.

As the gas expands, the kinetic energy of the gas molecules is converted into mechanical energy—either linear (in a piston and cylinder) or rotary (in a turbine)

To be honest, this concept has little meaning outside the usage internal combustion engine (see the write-ups in that node for a much more detailed explanation).

The phrase was coined in the late 1800s to distinguish a new type of engine—pioneered by Rudolf Diesel—from the more familiar steam engine.

In a steam engine, the steam is made by heating water in a boiler. Clearly, the boiler and associated combustion zone, are all outside the actual engine, even if they are physically connected to it. The hot, pressurised steam is made in the external boiler, and then allowed to flow into the engine, where it is made to work the pistons inside their cylinders.

Similarly with a steam turbine. Steam is generated in huge boilers, and fed into the turbine. The pressure of the steam acts on the turbine blades to cause motion. As the turbine speeds up, so the pressure and temperature of the gas falls. Hot, dry steam goes in one end of the turbine and cold, wet steam comes out the other. This cold, wet steam is pumped back into the boiler, where it gets a boost of energy, and the cycle continues.

The important thing to note in both engines is that the steam is basically a passive carrier of the heat energy, taking it from the boiler, into the engine, where the energy is extracted from the steam and converted into mechanical form.

With internal combustion, however, the driving force for the engine is the energy released during the combustion process. In a diesel engine, or a gas turbine, air and fuel are mixed, and pumped into the engine. Then, at a predetermined place within the engine, the fuel is ignited. Immediately, there is a huge increase in temperature and pressure, and this energy is used to act on the piston (in the case of a diesel or petrol engine) or the turbine blades (in the case of a turbine).

The process is much more active in the internal combustion, with the energy carried into the engine in the form of chemical energy latent in the fuel. That is transformed into heat and kinetic energy during the combustion, which is then converted into mechanical energy through the engine mechanism.