You won't be able to play Xbox Series X games from an external hard drive, but it's still worth plugging one into your system. In fact, you can use the same one that was plugged into your Xbox One and start playing the same games immediately.
During the latest Inside Xbox episode, Xbox Series X director of program management Jason Ronald shared that you'll be able to unplug your external drive containing Xbox One games from the old console, plug it into Xbox Series X, and get access to the same games running from the external drive.
This means the 1 TB storage on Xbox Series X and the optional 1 TB expansion card can be reserved for next-generation games alone, while everything else is stored on an external USB drive.
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