So say if i change the internal reference to 1.1V, would that mean that analog max voltage would be 1.1v? If so, why must I do that?
Yes, max input voltage would be 1.1V . I don't think you need more with a Si diode. Lowering reference you increasing ADC resolution. For example, with default 5V reference, one "count" ADC is equal to 5 / 1023 = 4.88 mV. Which is high to measure 2 mV raising voltage per degree of temperature. In other words, ADC would report next value only when changes in temperature about +-2.5 degree. Usually, amplifier (OPA) required to overcome this issue.
Why can I not keep it at 5v and use a higher resistance for my resistor?
Higher resistor value produce lower voltage across a diode.
And lastly, in the link you guys gave me, it says the current has to be arround 1mA, why is that?
I think it compromise value, from one side (lower current end) there is a leakage:
For instance, many monolithic temperature sensors have an output of only 1 μA/ ̊K. This leads to a
1 ̊K error for only 1 μ-Ampere of leakage current
"Application Note 460 LM34/LM35 Precision Monolithic Temperature Sensors"
on the other side - self heating, P = V x I.