What is the internal representation of all the datatypes.

Can you explain further about what you mean by internal representation?
As far as the SQL is concerned a data type is an attribute that specifies the type of data that the object can hold: integer data, character data, monetary data, date and time data, binary strings, and so on.
As BOL too: SQL Server supplies a set of system data types that define all the types of data that can be used with SQL Server. You can also define your own data types in Transact-SQL or the Microsoft .NET Framework. Alias data types are based on the system-supplied data types.

Ok that gives bit more information, as you are aware SQL Server has variety of datatypes and more options you have that are confusing & misunderstanding arise from data type limitations rather than functionality.
Here is the table list that can clarify few of your doubts which is extracted from SQL Server Books Online:

Character data types

Data TypeLengthStorage SizeMax CharactersUnicode
charFixedAlways n bytes8,000No; each character requires 1 byte
varcharVariableActual length of entry in bytes8,000No; each character requires 1 byte
ncharFixedTwice n bytes4,000Yes; each character requires 2 bytes
nvarcharVariableTwice actual length of entry in bytes4,000Yes; each character requires 2 bytes

Integer data types

Data typeMinimum valueMaximum valueStorage size
tinyint02551 byte
smallint-32,76832,7672 bytes
int-2,147,483,6482,147,483,6744 bytes
bigint-9,223,372,036,854,775,8089,223,372,036,854,775,8078 bytes

Precision storage requirements

Total characters (precision)Storage size
1 - 95 bytes
10 - 199 bytes
20 - 2813 bytes
29 - 3817 bytes

Float and real data type restrictions

Data typenMinimum ValueMaximum valuePrecisionStorage size
float(n)1 - 24-1.79E + 3081.79 + 3087 digits4 bytes
25 - 53-1.79E + 3081.79E + 30815 digits8 bytes
realn/a-3.40E + 383.40E + 387 digits4 bytes

Smalldatetime and datetime restrictions

Data typeMinimum valueMaximum valueAccuracyStorage size
smalldatetimeJanuary 1, 1900June 6, 2079Up to a minute4 bytes (the first 2 bytes store the date; the second 2 bytes store the time)
datetimeJanuary 1, 1753December 31, 9999One three-hundredth of a second8 bytes (the first 4 bytes store the date; the second 4 bytes store the time)

Smallmoney and money restrictions

Data typeMinimum valueMaximum valueStorage size
smallmoney-214,748.3648214,748,36474 bytes
money-922,337,203,685,477.5808922,337,203.685,477.58078 bytes

In addition to the above SQL Server 2008 gets new data types, date/time/datetime2/datetimeoffset/hierarcyid/spatial, for more information on these types BOL is your best friend http://sqlserver-qa.net/blogs/sql2008/archive/2009/02/04/5391.aspx fyi.