Business Connectivity Services Basics
Business Connectivity Services is a free service that comes with the Foundation version of SharePoint. The service enables administrators to create external lists linked to data outside of SharePoint.
Normal SharePoint lists expose data that is stored inside of a SQL content database that SharePoint creates and maintains.
Business Connectivity Services can expose data that is external to SharePoint, i.e., stored in a database separate from the SharePoint content database. An External Content Type is used to define the external data to the SharePoint system, kind of like a window.
Once the External Content Type is defined, you can create an External List using a special list template that comes with SharePoint and Business Connectivity Services. The External List works through the "window" the External Content Type provides to expose the data as if it were a normal list. The user is usually not even aware the data is really from outside the SharePoint site's normal content.