What is the DHCP scope and what is its purpose? I have a feeling it sets the scope for what is an internal IP and what is an external IP on the network. ie it sets the scope of IPs that can be used on the network.
has very little to do with "internal" or "external" -- scope the range of IP addresses that the DHCP server has available to hand out to DHCP clients. No more, no less.
Now, you can make it hand out internal IPs by specifying an internal range of IPs for the scope, or external ones by specifying an external IP range. IP is IP, DHCP doesn't care. You can also use DHCP to send out all kinds of neat stuff, like gateway IPs, DNS, WINS servers, even mail and time servers.