The term Internal Memory is confusing, but think of it like as a hard drive of your pc. Your PC stores the Windows OS, applications and settings, themes and all on its hard disk. The remaining memory is what we use on the the hard disk. Since we have hundreds of GB on the PC, we usually neglect the space occupied by OS and applicatoins. Similarly in Android, when they say 4GB internal memory, it is the onboard storage that phone has, not the memory that is available to the user.
To be more clear, Internal Memory is used by the Android OS, User data(preferences, databases etc) and any applications that the phone cames preloaded with. So at the end we are left with 1.27GB Internal Memory.
Also note that another partition of 1.25 GB is shown as "Phone storage". This is shown as SD card when no actual micro sd card is inserted in the phone.
This is not limited to Lenovo A369i, this is true with any Android phone. Take any android phone with 4GB internal memory, you will see similar end user memory with few kb here and there.