External Subscribers are used whenever you want to distribute across trees and the Distributor and Subscriber objects are not in the same tree.
For example, the Distributor is in Tree A and a target Subscriber is in Tree B. The Distributor's NCPTM server and Distributor objects are both in Tree A. The Subscriber's NCP server and Subscriber object are both in Tree B. This Subscriber needs an External Subscriber object created for it in Tree A, and that object needs to have a parent Subscriber in Tree A associated with it. The Distribution is sent from the Distributor to the parent Subscriber in Tree A, which in turn passes it on to the Subscriber in Tree B by using its External Subscriber object in Tree A for location identification.
However, if a target server in Tree B (where its NCP server object resides) has a Subscriber object created for it in Tree A during installation of Policy and Distribution Services, an External Subscriber object is not necessary for it to receive Distributions from the Distributor in Tree A.
Use Policy
Select this check box if you want to use the values set in the
Tiered Electronic Distribution policy that is associated with the External
Subscriber's container. If you select this option, the Parent Subscriber field on this page is disabled and the policy settings are used instead.
Parent Subscriber
Specifies a parent Subscriber through which all across-tree Distributions can be received. However, an External Subscriber can receive Distributions directly from a Distributor.
If a parent Subscriber is used, it must be in the Distributor's routing hierarchy.
An External Subscriber cannot be a parent Subscriber itself, although its parent Subscriber (if it uses one) must be in the same tree where its External Subscriber object resides.