Unlike the internet-facing load balancer, this one is mainly designed for distributing the traffic across a specific subnet within a virtual network.

An internal load balancer can be used in the following scenarios:

• Intranet app running on Azure IaaS, for which you want to distribute traffic across the VMs on which the app is built.
• Cross-premises Azure virtual network, so that if you have a site-to-site VPN, you can have an internal load balancer set on a virtual network and distribute the incoming traffic from on-premises across the backend VMs.
• Non internet-facing machines. For example, you may have some virtual machines that do not have internet access, and you want to distribute the traffic across them.