Yes, intarsia is used in knitting, but it use here is rather new-- or the use of the term is new in US. i have been knitting almost as long as i have been reading, and as a child, knitting with blocks of color, or vertical striping, was called color blocks. Now it is intarsia.

finely patterned horizontal stripes, or patterned horizontal stripes, is still called fair isle, from whense it first originated.. (i don't know if there is a Fair Isle in UK, or if it a corruption of faroe island,)

in the UK fair isle type knitting is strongly associted with Faffe Fassett, a designer who is well know for her very patterned, fair isle type sweaters.

i'll check my knitting sites and see if i can find some examples.
here is a site with a longer explaination, and it has links to both styles--Intarsia, and fair isle.
http://www.maggiesrags.com/tips_color.htm

my other obsession