An external link is a clickable link from someone else's web site to your web site.
An external link, sometimes called an internet link or a web link, is a link from another web site to your web site. This allows people visiting the other web site to get directly to your web site from this other site.
External links are important to any web site where traffic is important to the success of the site. (Yes, believe it or not, there are exceptions to that statement.)
External links help your web site - and your organization - in several ways. They allow people to directly access your web site from another site, so visitors to that other site can potentially be visitors to your site. Indirectly, though, external links are an important part of your overall SEO (search engine optimization) strategy. External links help search engines find your site in the first place, and then reinforce the importance of your site.
From a SEO standpoint, there are really four kinds of links to your site: unsolicited external links, requested external links, paid external links, and hidden external links.