Some people also seem to use external devices too for podcasting and the like. What are they for? Just some kind of equalizer?
TL;DR: If you're serious about broadcasting, yes, they will help!
Here's the main problem: The sound "cards" included in motherboards of typical PCs or laptops are of rather bad quality. Here are some drawbacks:
With external audio interfaces (that's the common term), you overcome all that:
External audio interfaces are mostly connected through Firewire (IEEE 1394) or USB 2.0. They come in price ranges from around $100 up to thousands of dollars, due to differences in the quality of the microphone preamplifiers, the number of inputs, routing capabilities, etc. For simple podcasting, a simple audio interface will also do.
Here's an example of a very basic external audio interface:
You can see that there are two microphone XLR connectors, as well as a headphone connector. The knobs allow you to change the microphone gain as well as the headphone volume.
Some manufacturers offer audio interfaces bundled with microphones, which seems like a good deal for podcasting.