Will encryption encrypt my "internal sdcard" (personal data)?
Short answer: no, the emulated SDcard storage is not encrypted.

I believe I am in a similar situation as you. I have a HTC One S4 ("Ville") here which also lacks an SD card socket extension, so the phone is partitionned in a way to make it look to Android that there is an actual sdcard in there. It is mounted in /sdcard and there's a separate /data partition that holds the usual private data (contacts, sms, etc).

Following the Encrypt phone procedure from Cyanogenmod 12.1, only /data is encrypted but /sdcard is accessible without a password! That is, to say the least, a little disappointing. I am not sure it is absolutely inevitable: I suspect that the internal sdcard wasn't encrypted because it was formatted as FAT.

I was able to reformat the filesystem as EXT4 by mounting it on my laptop and re-formatting, at least. Unfortunately, vdc cryptfs enablecrypto inplace found that the phone was already encrypted and didn't attempt to encrypt the SD card. I am still at a loss as to how to encrypt that part of the phone and so have resolved to avoid storing too sensitive data on that partition.