Guest Users vs. External Users

We use the terms interchangeably at Microsoft as well. External user is an older term from back when all "guests" in the directory authenticated outside of the home tenant. When we added support for managed guest users (i.e. the user authenticates inside the home tenant), the "external" piece stopped making sense and "guest user" was born. 

And as with many of these types of things, we ended up using both names to refer to the same set of features. If there is a feature/scenario where this language does make a difference, we try to make sure it's clearly labeled to avoid confusion. 

Thanks,

Stephen Rice

OneDrive Program Manager II