UPDATE: This question was the subject of my blog in September 2014. Thanks for the great question!
There is considerable debate on this question even within the compiler team itself.
First off, it’s wise to understand the rules. A public member of a class or struct is a member that is accessible to anything that can access the containing type. So a public member of an internal class is effectively internal.
So now, given an internal class, should its members that you wish to access in the assembly be marked as public or internal?
My opinion is: mark such members as public.
I use “public” to mean “this member is not an implementation detail”. A protected member is an implementation detail; there is something about it that is going to be needed to make a derived class work. An internal member is an implementation detail; something else internal to this assembly needs the member in order to work correctly. A public member says “this member represents the key, documented functionality provided by this object.”
Basically, my attitude is: suppose I decided to make this internal class into a public class. In order to do that, I want to change exactly one thing: the accessibility of the class. If turning an internal class into a public class means that I have to also turn an internal member into a public member, then that member was part of the public surface area of the class, and it should have been public in the first place.
Other people disagree. There is a contingent that says that they want to be able to glance at the declaration of a member and immediately know whether it is going to be called only from internal code.
Unfortunately, that doesn’t always work out nicely; for example, an internal class that implements an internal interface still has to have the implementing members marked as public, because they are part of the public surface of the class.