For Example, you are having customer data in an MySQL server out of your Salesforce Environment then MySQL is the External Data source and the tables inside external data source are known as External Objects
External Datasource are the source of truth for the external objects in Salesforce.
For Example, you are having customer data in an MySQL server out of your Salesforce Environment then MySQL is the External Data source and the tables inside external data source are known as External Objects

1 – Link to External DataSource – https://orderdb.herokuapp.com/orders.svc
2 – https://trailhead.salesforce.com/content/learn/projects/quickstart-lightning-connect
3 – https://help.salesforce.com/articleView?id=platform_connect_considerations.htm&type=0
4 – https://developer.salesforce.com/docs/atlas.en-us.object_reference.meta/object_reference/sforce_api_objects_external_objects.htm
Great Post – Amit as per Trailhead. In case of External lookup you can have Parent object as external and child can be related as Standard or Custom or any other external object.
And , in case of Indirect Lookup Parent Object will be Standard or Custom but child will be always External.
Reference at the end of this page:
https://trailhead.salesforce.com/content/learn/modules/large-data-volumes/design-your-data-model?trailmix_creator_id=strailhead&trailmix_slug=architect-data-architecture-and-management
Thank You 🙂