Ok this topic has raised many doubts in my head. We all do internal linking(linking to one page from another of the same domain).

What are the benefits?
Do internal links act the same way as backlinks on third party sites?
Do they pass PR if not nofollowed?

I have seen many PR6 blogs with some posts which are hardly a couple of months old having a PR of 5. Strange isn't it, yet very much true.

Naturally, every page on a site normally has a minimum of 1 link to it from another page on the same site. But it is a tendency and regarded as a good Seo practice to do more internal linking, e.g. links within articles wrapped around keywords targeting other pages on the same domain.

Internal links are not shown as backlinks in G's Webmaster Tools neither are they shown in Yahoo's site-explorer.

My question is, do they actually hold any value?