External balance means that all major rotating componets are balanced independant of each other. ie;crankshaft balanced by itself, not with flywheel & front damper bolted to it. Many of the newer engines don't even have front crank dampers, just hub w/pulley.
Most older engines had the crank assembly balanced together. Sometimes replacing flywheel would cause imbalance.
As long as each componet has dynamic balance it can be replaced on external balanced engine w/o complete disassembly.
MERCEDES BENZ MASTER GUILD TECHNICIAN
ASE MASTER TECHNICIAN
27 YEARS DEALER M.B. Shopforeman
190E 2.3 ITS RACECAR
1986 190E 16V