Yes. Let's Encrypt can be used for certain internal websites, particularly when using the DNS-01 challenge.
For example, an internal HRMS application may use:
https://hrms.company.com
and resolve internally to a private IP such as 10.10.20.25.
With DNS-01, Let's Encrypt verifies control of the domain through a DNS record. The HRMS server itself does not need to be publicly accessible.
However, the resulting certificate is still a publicly trusted certificate. It is not a private certificate simply because the server is internal.
This means organizations should consider whether they want their internal applications to use the public Web PKI, including considerations such as Certificate Transparency, DNS dependencies and certificate-renewal infrastructure.
For strictly internal applications, a Private CA is another option. It allows an organization to establish its own controlled trust model for internal servers, hostnames and private IP addresses.
In short: Yes, Let's Encrypt can work for internal websites. The more important question is whether public trust or controlled organizational trust is appropriate for your environment.
Related: What Are the Risks of Using Let's Encrypt for Internal Websites?
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