Conflict drives the action in your story and makes the reader care about your characters, their failures, and their triumphs. Your plot may be thought of as a tree. The characters are trying to reach the top of the tree. Conflict determines which branches they climb on the way to the top. Conflict in a story comes from two sources, internal and external.
Internal conflict originates from within a character. It stems from the decisions he makes and how he feels about his choices. A character’s internal conflict drives him to choose one course of action over another. Internal conflict causes a character to choose different branches of the plot tree based on how he feels about following that course. Branches may be chosen because they look more stable and attractive, or because of the view they offer of the landscape. Internal conflict causes characters to climb the plot tree while focusing on themselves, how choices will affect them personally, and what things seem more attractive at any given time. This character is less concerned with getting to the top of the tree than with carefully choosing his own path.
External conflict gets the character to the top of the plot tree by the most secure means possible. Branches of the tree are chosen based on their inherent stability, ease of access, or perceived danger. External conflict comes from branches that are rotten inside, too small to bear the weight of the character, or blocked from the top by larger branches. Forces completely outside the tree may drive character choices, as if someone were standing at the base and throwing stones at the character. The character following a path of external conflict is less concerned with choosing branches based on how they make him feel and more concerned with the ability of the branch to bear the weight of the story.
The journey of the character through the plot tree is seldom going to follow only one course or the other. Ideally, characters should complete their journey of self-discovery while navigating the plot along those lines that make the best story choices. The goal is to get to the top of the plot tree, and make the climb and interesting one.