This is Part Two of a four part post. Part One: the basics is here.
INTERNAL NARRATORS (i): The character as narrator
If your narrator is internal, a character-narrator, then the question of point of view is usually assumed to be simple. A character who is inside the story tells their story in first person, because "I" was there. So Andy narrates: I saw John with the stolen brooch in his hand - I guess he stole it, but I don't blame him. His baby was crying in the next room, so he must have stolen the brooch to buy milk. I frowned, because I didn't think I could bring myself to report him. And generally speaking the narrative will take on at least some flavour of Andy's voice, because voice is the combination of what is said, and how it's said - and here Andy's character will shape that.
A character-narrator such as Andy, it's usually said, is limited to narrating what he can perceive, and what he knows: his consciousness is the lens through which we're granted access to the scene, and it's our first tool in understanding it. If he's not there, we don't have access to what happened there, unless he discovers it by some other means. If Andy's in one room, then he can't perceive and therefore can't narrate what's going on in the room next door, except in terms of hearing raised voices or smelling the fire. And, crucially, Andy can't actually, truly know what another character is thinking or feeling. He can guess, he can deduce, he can report what another character says they're thinking. But he doesn't have access to the inside of anyone else's head. So in the conventional concept of a first-person narrative, what Andy can't say is: John had a brooch in his hand, and he was trying to work out if I knew he'd stolen it; I was frowning, and he felt guilty because he wasn't going to buy milk for the baby, he was going to put the money on a horse.
This strictly limited point of view is in some ways very easy to deal with. It sorts out what scenes you can write for your story, and how you're going write them, because Andy's consciousness and voice filters everything. It's simple to ask yourself, each time, "Is this something that Andy can see/hear/feel/understand/think/know? Is this how he'd understand it and tell it?" And that's probably why it's many, many people's choice for their first novel: instinctively, and in some ways rightly, they feel it makes things manageable.
But like all limitations, simplifying some questions can actually make other things more complicated. It can make plotting very awkward, as you have to work out how to transmit things the reader needs to know which Andy can't. And if Andy doesn't like someone, or misrepresents them, it's a problem if you don't want the reader to feel the same... unless you're willing for us to be cross with Andy for being stupid or unfair. If we really don't like him we may give up on the book. It takes clever writing to get the reader to think something other than what the character-narrator thinks. And many readers (especially at the commercial end of the market) are uncomfortable with a character who they can't work out - who they don't know whether to like or hate. More generally, a character-narrator can make the world of the novel very claustrophobic, and the experience of writing it frustrating, because you can't range widely in voices, places, times and emotions.
INTERNAL NARRATORS (ii): Understanding the difference between narrator and character
So, if you want things to get more interesting and flexible, (and just possibly annoy some of your more narrow-minded peers, teachers and editors) stay with me. Inspired jointly by this post by Jauss on narrators, and by my own exploration of memoir and life writing, I want to suggest that a character-narrator isn't one entity, but two: a narrator standing outside the story, and a character inside it, who just happen to share the same name.
As a character, the normal human nature of point-of-view applies: Evelyn can't see into the next room, s/he doesn't know what will happen next, and s/he certainly can't know what's going on inside Joanna's head. Evelyn's experience is still limited by his/her consciousness.
But as a narrator, Evelyn's telling a story and like any storyteller - like you - s/he has the privilege of telling whatever will make the story work, whether or not any character knew it at the time. As a narrator, Evelyn can say: While I was getting dressed to seduce Alex, over on the other side of town Joanna was planning to seduce me. She was singing to herself with the thought of our night together.
I'm not being as unorthodox here as you may be thinking. It's very common to have things in a first-person narrative such as: I didn't know then that things were about to get much worse, and that's not, actually, any different from narrator-Evelyn telling us that Joanna was making plans. These are both things that the character-Evelyn didn't know at that moment, but the narrator-Evelyn came to know later, or understand later - and now chooses to tell the reader.
So, though you'll get a lot of people disagreeing with me and with Jauss in that post, I'd argue that there's no reason, in principle, that such a narrator can't tell us whatever she likes about what's going on in other people's heads. People writing their memoirs do it all the time, after all: I was three when their disagreements over politics - specifically Appeasement - caused my parents to divorce. All I remember is my father telling my mother that she should trust in Herr Hitler. Like so many of his generation he was haunted by memories of the First World War, and Hitler at that date was still taking care to show nothing but good will towards Britain...
So why shouldn't you do this in your novel, if it suits the project? As ever, if you do it badly people will tell you not to do it. If you do it well, unless they're specifically looking for PoV "mistakes", they may not even notice. One thing that will help, though, is if you keep that memoir example in mind. If you build the novel as narrator-Evelyn telling us What Happened Last Year When I was Young, then it's easier to get the reader to believe things that character-Evelyn couldn't have known. The other thing that will help is looking hard at the next part of this series, where I discuss Privileged Narrators, because that's what we're talking about here: the fact that because this character-narrator is telling a story of what's already happened, they do have priviliged knowledge that they didn't have while it was happening.
IT MAY NOT BE THE NARRATOR'S STORY
Of course, a character-narrator may not be telling a story about themselves, but one about someone else. The peerless example of this is The Great Gatsby. Narrator Nick Carraway is in the story; who he is and why he's telling it is mildly important to the plot, but very important in our experience of the whole story. The story from another character's point of view might chart some of the same events, but it would have a very different effect on the reader. And most people forget that the narrator of Wuthering Heights is a character-narrator: Mr Lockwood, and within his is another character-narrator, Nelly Dean, and between them they put together the story of Cathy, Heathcliff, and the poisoned generation they gave birth to. These narrators' personalities shape the story - it couldn't be otherwise - but they're not the central point of it. Which is proof - if you needed it - that we don't need to be inside a character's viewpoint to care about them.
Next: External Narrators