Hello Jessica,
A package holiday is one that includes flights, transport and the hotel, in one fixed cost. Food and drinks may be included, or they may be an extra charge.
All inclusive, on the other hand, is talking specifically about the hotel. If you are staying at an all inclusive hotel, that means that all food and drinks are included with the price of the hotel. Everything is free when you get there.
As for question 2, in some countries you would carry an identity card around with you. This is the internal passport that you are talking about. I'm a foreigner working in Japan, so I carry my alien registration card with me, to prove that am I here legally.
A passport is just a passport. It's a document used for international travel. You should call it a passport, not an international passport.
I hope this helps,
Tom