Thanks for the update! When you select the option to "Include all domain users" on an alias, messages sent to that alias will be delivered to every user's mailbox on that domain. Aliases would not be included, as these don't have mailboxes associated with them.
Regarding the "Internal only" setting, it looks like I was actually mistaken... The "Internal only" option will restrict mail delivery to only domains on your server. While an email sent to the alias from Gmail will not be delivered, an email sent from another domain on your server should. The main idea for this functionality was to avoid getting spammed from outside senders to an alias that potentially reaches all of your domain's users. In scenarios where customers have multiple domains that they control on one server, they may want to send messages cross-domain.