With externals, you have less folders in the /Interface/Addons folder, it means each addon will contain a libs folder with the libraries that addon needs. Result: Wow will load the addon and thus the libs, next addon may have a new version of that lib, Wow loads it again, sees the libs are newer, discards the previously loaded libs, etc until the full loading is done. It will take a fraction more time to load (this isn't always noticeable.)
Without externals, you will have a lot more folders, but you have only one copy of each library, which decreases your load time (not always noticeable as I said). But that is about it.
Which one is better? Decide for yourself, I prefer without externals simply because it seems to load things a fraction faster, but I have a shitload of folders that I have little idea about. So for an end-user not looking into creating addons themselves, it may be beneficial to just use with externals. Do a search on the forums, you will find more topics on this than I care to admit or think about.
For me, the biggest "hogs" are Ace2, which is used by almost all my addons, and PitBull. Often PeriodicTable chimes in, other then those none of my addons go over 1MB. Ace2 uses around 2 to 3MB, PitBull usually 1 or 1.5MB. My total addon load is tops 30MB.
(Fubar 3.0 is using 154kbyte here with external libs)
Same with me, I actually had to install Usage to see Fubar show up at all >.< It's one of my lowest users on my setup.
Edit for clarity's sake. I too am using external libs (meaning my libraries are in my MAIN addon folder (World of Warcraft/Interface/Addons/libname), not within the actual addon's folder (World of Warcraft/Interface/Addons/addonname/libs/).