I have two ps5s (one at home and one at work), I have an external drive and I can only play PS4 games on it, PS5 games have to be moved to the internal hard drive to be played.

I do have a second internal hard drive in both and I can play PS5 games from those.

On my Steam deck I upgraded my internal drive and threw the original into a usb enclosure. I do not have enough installed yet to need an uSD card though.