External Account Hierarchy (introduced in Salesforce Summer ‘20 release) allows the customers to share records between the community users of one company to community users of another company. This can be an extremely useful feature if your customers and/or partners have parent-child companies, and you want to share the child company records with the parent companies.
For example, let’s say that you have a dealer called “United Gas”, headquartered in Singapore. This dealer has subsidiary companies in UK, India, Thailand, Philippines etc. and you want to share the records created by community users of United Enterprises UK (subsidiary) with the community users of United Enterprises Singapore (HQ).