Need some clarification about Android storage

Hi to all.
I need some clarification about Android storage, please.

How many storage units Android OS have? Including a possible microSD external Card.
Internal Storage, internal memory?! Whats the difference and location in file system folders?

When an app is installed from market where does it go?

In application manager, in most apps there is an option "Move to SD card"...
If I have an external micro SD Card and choose this apps option "Move to SD card" where the heck is suppose to going the app or some part of it? (Data? Apk? Cache?) It's not in external microSD Card! So what is "Move to SD Card".

I'm confused here need some expert (but simple) explanations.

Thanks.