I get nervous when I see someone use the writing cliche "Show, don't tell." I get nervous because it's the kind of advice that's useful to beginning fiction writers at a certain point in their development, and after that point, I think it's limiting at best, and harmful at worst.
Think of the advice to "get plenty of exercise." I don't think many people would hear "get plenty of exercise" and assume they should never sleep, since sleeping is the opposite of exercising. Yet when I participated in on-line critique forums and when I listen to developing writers critique each other, I notice people saying "show, don't tell" as if they really believe prose is never supposed to tell.
"Show, don't tell" really means "Use behavioral examples, don't simply state facts." It means "make your characters do things that demonstrate the point you, the author, want to make."
So instead of writing "Pat was an alcoholic," write "Pat started the day with a glass of vodka and finished it with several more" or something. We'll all agree the second example is more evocative than the first. But if you take "show, don't tell" to heart, all you'll ever do is describe people's actions. You'll never once step inside their head and let us know what they're thinking or feeling, because that would require telling. (And that's fine if you're trying to out-Hemingway Hemingway, but he used telling plenty of times. From A Farewell To Arms: "The world breaks everyone and afterward many are strong in the broken places. But those that will not break it kills." That's as telling as telling gets.)
Internal narration is one of the most powerful techniques a fiction writer can use, and it's a form of telling. In fact, it's a technique only available to prose writers. Movies can't do it, at least not without voice-overs. Plays can't do it. Movies and plays really do need to show, not tell, because movies with long stretches of a character telling things is difficult to sit through, even when done well. That's why it's very difficult, in a movie or play (especially a play), to get across certain basic facts about characters, like their birthday, without using carefully staged tricks, such as showing a calendar while showing someone celebrating with a birthday cake. Or, of course, by having a character TELL the audience, in dialogue, "Isn't it your birthday today? It's December 23, right?" (And if the response is, "No, that was your first husband--mine's in May," now the audience has been told and shown the first speaker used to be married to someone else.)
Great fiction writers "tell" all the time, because when done well, prose can get complex layers of information across better and faster than any other storytelling medium. Here are three examples of good telling from three award-winning short stories published in the last two years.
His name was Howard Ritche, and he was only a few years older than she was...
from Corrie by Alice Munro
I always think I can finesse these situations--the last was maybe seven years ago, when I received an award at the college where I teach--but in the event I am clumsy and fall back on false hurry.
from Things Said or Done by Ann Packer
Martha filed for divorce. She collected the apartment on Central Park West and a considerable sum of money, then went to counseling. Lovers did not materialize to replace the discarded husband.
from Volcano by Lawrence Osborne
Look at the word "discarded" in "discarded husband." The use of that adjective is an example of "telling" that no non-verbal storytelling medium can reproduce. We never even see the husband. A movie, at best, would have to use some kind of montage sequence showing Martha signing divorce papers, still having the apartment (with a shot of a sign saying "Central Park West" so we learn the name), getting a check or payment with a number the average audience member would call "considerable," then going to counseling, then being alone in a lot of places that indicate she's looking for romance, then remaining alone in those places as romance happened for everyone around her but not her. That might work, but it would take a while and halfway through the montage we'd guess where the movie was going and be bored with the scene before it finished. Yet "Volcano" accomplishes all of that and more so quickly the reader doesn't have time to be bored, and so evocatively the reader's imagination is activated and fills in everything the story is just suggesting.
My point is, there is good telling, and there is bad telling. If you want the best treatment of good vs. bad telling I've ever seen, get The Making of a Story by Alice LaPlante and study Chapter Five: "Why You Need to Show and Tell." I've backed up some of her points in this entry, but there's no substitute for the line-by-line dissection of long passages from short stories to demonstrate when one technique works better than the other.
So I say quit worrying about whether your prose is showing or telling, and worry about whether it's evoking thoughts and feelings in the reader. In the end, fiction is about what the reader thinks and feels.