Character is the crux of the story and the place conflict begins. Good characters are those with problems that are both perplexing and solvable, and it is this effort to understand the character's problem, both within the story and for readers, that creates conflict for the story. A character that is eternally resolved to their situations is a character without resolvable conflict, that is, without a compelling story to tell.
Internal conflict is what occurs inside the character. Emotions and desires are central to internal conflict, but internal conflict should provide a real, honest challenge to the character experiencing the conflict. If the character's driving goal is to lose weight, for instance, give them road blocks that make that desire difficult. Give them a sweet tooth or friends, and family, who are enablers and bring food. Internal conflicts are best when they're relevant to the character's life situations in some pertinent way.
External conflict occurs when events outside the character's control become roadblocks to finding a solution to the conflicts. External forces may be anything outside the character that acts upon them in a meaningful way. Examples of external conflict include community, other characters or forces of nature. What is most important is that, like internal conflict, the external occurrences are relevant to the character in some meaningful way. A character living in Wyoming, for example, will never be sideswiped by a hurricane. Conflict must be believable.
A short story should consist of a minimal cast and one major conflict so the story does not get bogged down in the conflicts and character interactions. Choose either internal or external conflict for a short story. The entire point is the swift and meaningful resolution of one conflict, so short stories should almost never include side conflicts or subplots that could derail the intent. Side conflicts or additional plot threads should be installed in a short story most often if the story is a part of a series of tales, otherwise short stories should be kept to one conflict per customer.
Novel-length works are usually substantially longer and more complicated than are short stories and so should include more than one conflict. One arching conflict is fine, but smaller subplot conflicts should exist to give the novel dimension and hook the readers. As the novel unfolds and readers are hooked in, additional elements of conflict can entice the reader further, create much needed distraction and enrich the story and it's characters. Novel characters must be complex to sustain a work of novel length and complex characters are characters with conflicts, both external and internal.