This functionality is related to the client-server communication which is best described in the page 7-3 of TMSM Admin Guide:

Web reputation policies dictate whether Trend Micro Security will block or allow access to a website. To determine the appropriate policy to use, Trend Micro Security checks the client’s location. A client’s location is “internal” if it can connect to the Trend Micro Security server. Otherwise, a client’s location is “external”.

Therefore, if the TMSM client is able to communication to the TMSM/OfficeScan server port, then it will appear as INTERNAL. If not, then it will appear as EXTERNAL.