Internal vs external steam distillation
The main purpose is to distill the component (essential oil) with quite high boiling point. 
You have to think of distillation of immiscible liquids, http://www.chemguide.co.uk/physical/phaseeqia/immiscible.html
where you can take advantage of the equillibria in liquid and gas phase separately.

In short - two very beneficial things happen: 


boiling point of the mixture is lower than boiling point of water (and substantially lower than BP of the oil)
the composition of vapor is independent of composition of liquid, i.e. you can distill out even the smallest fraction of oil (c.f. Raoult's law for miscible liquids)


On the other hand, the partial pressure of the oil is small, let's say 5% that of the water, therefore you need to evaporate and condense 20x more of water than of oil. To achieve this, you can either put all the needed water in the flask and do the "internal" distillation, or add just a small amount of hot water and use steam from external source in "external" setup.

In general, it is simpler to just boil pure water (or even have a direct source of steam) and use it for distillation, than to take care of the whole process in one flask.

As such, I would see the "external" setup simpler and more robust, even though it needs little bit more glassware.