External Instruments
An external instrument bus is an input (return) to your audio hardware, along with a MIDI connection via Nuendo and additional settings.
External instrument busses are created in the Audio Connections window. All external instrument busses that you have created appear on the VST Instrument pop-up menus and can be selected in the same way as any VST instrument plug-in.
If you select an external instrument, you must create a MIDI device to play it via MIDI. The sound that is output by the synth audio output will come in to the VST environment, where you can apply processing, etc.