Does the immune system distinguish between internal and external dangers?

I’m not sure what you mean by internal or external. The immune system normally only reacts against foreign substances or foreign cells. They are potentially dangerous. But those foreign, external dangers must first have penetrated the body before they can be reacted to (and then they are internal).

Cancer cells are an internal danger, but the immune system can consider them “external” once the cancer cells start to show foreign substances (the result of mutations).

Some microbes, such as viruses, invade our body cells. There are specialized immune cells that can recognize and kill the infected cells, these are the T lymphocytes. When the microbes are in the blood or in the body fluids, there are other immune cells that react against them, namely the B lymphocytes.