Note: As with any aspect of writing, I'm sure there are those who disagree with it. If you disagree with the conclusions I've come to below, I would like to hear your thoughts. However, I would ask that you put them in comments, and leave answers for actually answering the question.
I recently asked the question, What is the Purpose of an Inner Conflict? I had no idea what I was getting myself into. @MarkBaker showed me that (in a nutshell) an inner conflict is a struggle between two choices, and the final choice is the climax. He also mentioned that external conflict is merely a device to set up that climax.
This flies in the face of how I have viewed conflict up to this point. Until now, I saw novels as having two distinct conflicts: Main Conflict, which was the external conflict, and inner conflict which was a reflection of the main conflict inside the character. Mark Baker's analysis of conflict makes sense to me, as it fits with what I know and works better than my previous view of conflict. It does however raise a question.
How does external conflict 'set up' the climax? This is a new way of seeing conflict for me, so I don't yet know how it works. However, the main reason I ask this question, is because it seems to me that there are other devices one could use to set up the climax in which the inner conflict is resolved. Why do you need to use an external conflict? When do you know you need one or not?
(The above assumes there is a single large-scale external conflict that spans the novel, plus any other side conflicts. Let me know if there are in fact only many small external conflicts.)