What's the difference between having your sheets public and setting external users?

The "EVERYONE" user group is a setting to make your database public, either to set your database sheet so that anyone can create entries, like a survey, or to set your database sheet to be publicly viewable, like a product catalogue.

The external user structure is different in the way that you can add the users you want, or have others request access to your account.. It's also possible to assign entries to external users to have more control over what an external user can access.