How can internal war eliminate the literal war?

You are confusing individual conflicts with group conflicts.

While war is ugly and regrettable and to be avoided if possible, sometimes there are existential threats to a country, a people, a race, a belief.

Think of the American Civil War. At the heart of that conflict was a threat to the economic structure of the South. That structure was based on a horrible institution, yet conflict was seen as the only solution to the existential threat to the society.

War involves a division between us and them. It is not due to an error in thinking. I think that to an extent it is instinctive, just as it is with our primate relatives. You might appreciate Steven Pinker’s book, The Better Angels of Our Nature. The claim in the book is that violence, both domestic and warfare, has been declining over the last 400 years or so. Here is a TED talk where he talks about his book, including possible reasons for the decline.

Reinventing those values is no simple matter. War is usually about subjugating one’s self interests to those of the state. The state of course is unlikely to suffer views from individuals either unwilling to subjugate their own interests, or more frequently, in disagreement with those annointed to declare war necessary to the interests of the state.

The road to hell is paved with good intentions. Balance will help eliminate war.