A haemorrhoid which is formed inside the rectum is known as piles. An internal haemorrhoid is formed when the veins within the rectum swell up. They can arise because of various reasons. In the case of piles, there are 4 stages which reflect the seriousness of the condition. With stage 1 being mildly serious with no swelling and stage 4 showing a prolapsed haemorrhoid with high inflammation in the surrounding area.