General internal bits that are bits that can only be used internal to the PLC, ie.. (Directsoft) C0, C1,.. C100 etc. They can be used in the ladder in the as input or outputs.
I/O or Input/Output bits are used for real world inputs and outputs, pushbuttons, swtiches, lights solenoids etc. They are addressed (Directsoft) X0, X1, ...X100 etc, Y0, Y1, ...Y100.
Internal bits can be used to show the status of inputs. They can also control the real world addressed outputs.
I/O input Internal
--| |----------------------(C100)
X100
Internal I/O output
--| |----------------------(Y100)
C100