Need help understanding internal transactions

Hi all,

I'm new to crypto and making my first steps in this world, and I think I'm lacking a key piece of information.

I have a hardware wallet and I bought a small amount of eth from an exchange.

The exchange sent the eth to my wallet using a smart contract, my questions are:

1. What is the reason to use a smart contract instead of sending the eth directly?
2. My Hardware Wallet only shows the eth balance but not the transaction history like I see on my BTC wallet, when I asked the HW vendor about it they answered the reason for this is because smart contract transactions are not a regular transactions and are not supported by the app.After further research I learned that smart contract transactions aka internal transactions are not recorded on the blockchain.if so, how is it still possible to see the balance of my wallet on sites like etherscan.io? where is this balance coming from?