External storage represents the physical disk space utilized by DB2 in the form of DMS and SMS tablespaces. DMS and SMS tablespaces use this physical storage space in different ways. With SMS, space allocation occurs when there is a need for additional space, and is, by default, allocated one page at a time. SMS tablespaces are managed by the operating system. By contrast, DMS tablespaces differ from SMS tablespaces in that space is allocated when the tablespace is created and is managed internally by DB2.
Tip: In general, use SMS tablespaces for general purposes because they provide good, low cost performance. If top performance is an issue, then DMS tablespaces are your best choice.