There's nothing really special about /AppleInternal, it's just a fairly normal directory that a couple of tools change in order to do things like offer more detailed diagnostics or the option to create a Radar. On a normal internal install there are some internal utilities, many of which are listed here: https://www.theiphonewiki.com/wiki/Category:Apple_Internal_A.... But their code is all Xcode projects and stuff, it's not like they're really using special tools for themselves except in certain cases. There are a couple of internal tools that possess entitlements to bypass security, but more often than not engineers just run with the security features disabled, which you can do yourself.

I would actually be quite happy if the engineers were forced to work on four-year-old MacBook Pros and develop against Display Zoomed iPhone 7 and the second generation Apple Watch, using the toolchain and software they push to their developers.

Nothing special that can really be talked without internal context. You can get a hint at how they use their own tools though (which are available externally) if you pay careful attention to their public appearances and presentations.

Very messy internally, every team has their own.