Choose ethernet. I'm not really sure on Internet vs. LAN. Mine's set to LAN, though.
It might have something to do with gateways and routing. My guess would be you'd use Internet if your machine was a direct gateway to the main network interface (cable modem). I think most people have routers serving as gateways now, rather than dedicated machines, so the internet option will rarely get used. If that's the case, then LAN would be for any machines behind the router/gateway.
