What is LTI at the course level?
LTI provides a framework through which an LMS (Canvas) can send some verifiable information about a user to a third party. For LTI to work, the third party needs to provide a consumer key and shared secret that Canvas can use to generate a signature to verify the authenticity of the data sent. By default most user information is anonymized, but this can be changed when the configuration is first set up.
When would I use an External App?
External Apps add functionality to a Canvas course. For example, an instructor may want to include a study aid (flashcards, mini-quizzes, etc.) to help students better understand the concepts being taught. An instructor can locate an LTI compatible tool and align it within the context of the course providing additional learning paths for students. Apps can be added to Modules, Course Navigation, the Rich Content Editor, and Assignments.