Hive has a relational database on the master node it uses to keep track of state. For instance, when you CREATE TABLE FOO(foo string) LOCATION 'hdfs://tmp/';, this table schema is stored in the database.
If you have a partitioned table, the partitions are stored in the database(this allows hive to use lists of partitions without going to the file-system and finding them, etc). These sorts of things are the 'metadata'.
When you drop an internal table, it drops the data, and it also drops the metadata.
When you drop an external table, it only drops the meta data. That means hive is ignorant of that data now. It does not touch the data itself.