The external form block compliments the built in form builder in concrete5 by giving you a flexible way to build forms with code. It comes with some example PHP files that show the formatting a form and controller must take in the /concrete/blocks/external_form/form/ directory. The typical external form will consist of a view file and a controller file that both share the same file name. It should make complete sense to any PHP developer, but this is not a particularly useful block if you can't code.
If you do need to reuse some encapsulated PHP throughout the site as a block, this is a great tool. All of your created external forms are kept in the application/blocks/external_form/form/ directory. These forms will be available in the "External Form to Include" select drop-down.