This is as simple an explination as it gets. Copy and pasted from TCI's site 'cause I just don't feel like typing it out tonight.
Hope this helps in some understanding.
Why do you need a vibration dampener or "harmonic balancer"?
Engine speed slightly increases during power strokes and decreases during compression strokes. This is what causes twisting vibration of the crankshaft. In some instances, since the crankshaft drives the cam, crank vibrations can also cause instability in the valve train. The dampers and absorbers are designed to reduce these vibrations.
What is crankshaft torsional vibration?
Answer: Due to their mechanical design, all internal combustion engines will display crankshaft torsional vibration. This is due to the fact that torque cannot be applied to crankshafts from firing cylinders with steady pressure. It varies with the position of the crankshaft in relationship to each cylinder. As the piston rises and falls, so does cylinder pressure. The changing pressure, acting on the piston, results in forces transmitted along the connecting rod and applied to the crankshaft journal. In the operation of the crankshaft assembly, the forces reverse back and forth. The crankshaft reacts and transmits these forces that are indicative of crankshaft torsional vibration.
This has nothing to do with internal or external balancing.