gift for close relatives or friends; return gift for a family celebration
A gift given to close relatives or friends to share joy on a family occasion such as a wedding, birth, or other milestone. In modern usage, it often refers to a return gift given to those who gave a celebratory gift.
As a wedding return gift, I sent a catalog gift to my relatives.
出産の内祝いに、職場の人たちへお菓子を配った。
For the birth celebration gift, I handed out sweets to my colleagues.
family celebration; private celebration
A celebration held privately among family and close friends, as opposed to a large public event. This sense is less common in modern Japanese, where 内祝い more often refers to the gift itself.
子どもの誕生日は、内祝いとして家族だけでお祝いした。
We celebrated the child's birthday as a private family celebration.