External hard drives are exactly the same as the internal hard drives that you would find in your desktop PC or laptop, except that instead of it connecting directly to the motherboard inside your computer. The disk itself is held in a separate enclosure that you can connect directly to your computer. External hard drives are used to store pictures, documents, music, videos and other computer files either permanently or temporarily, in exactly the same way as you would do with your internal hard drive.
External hard drives connect your computer via a USB, Ethernet or Firewire cable. As soon as you connect it up, your operating system will recognise the external hard drive as a storage device automatically and present it alongside your existing internal hard drive in 'My Computer' when using Microsoft Windows, for example.
Determining what capacity hard drive you need is dependent on what kind of computer user you are and how frequently you need to back up items. For example, those people who may only wish to back up documents, spreadsheets and photos will be suited to a hard drive with a lower capacity (something around the 250GB mark) while heavy multimedia users who wish to store lots of HD video may need a hard drive with a capacity in excess of 1TB (which is 1,000GB).
The speed of your hard drive is another very important factor to consider. What's the point of having a large capacity hard drive if it takes hours to transfer files? The speed of your hard drive is determined by the speed at which the disk itself spins inside the hard drive enclosure. The faster the disk spins, the faster you will be able to read and write files on your drive. This may be especially important if you wish to stream large files across a network.
It goes without saying that the faster and bigger capacity drives are going to be more expensive than their slower and smaller counterparts. What you need to do is work out how much disk space you are going to need and whether the speed of your external hard drive is of importance to you. At the moment, a 1TB external hard drive is more than the majority of users could ever need - these can usually be picked up for under £120.