Extraversion and introversion is about the direction of the libido (which, in the case of Jung, isn’t about our sexual energy, but rather defined as “the energy that manifests itself in the life process and is perceived subjectively as striving and desire.”).
When it comes to extraverts, this energy is focused outwards, on external objects. Since they focus on the external information, they aren’t as influenced by their already present expectations on the object, or any influence of their own or the collective unconscious. Obviously, it’s not possible to completely eliminate the presence of a subjective influence on our perception. Another aspect of extraversion is looking at the essence aspect of something. This is related to the objective, external focus, where what’s important is the actual aspects f something. What it is, how it can be used, its potential.
Introversion on the other hand, is highly connected to the subject and our impression of the object. Strongly connected to the unconscious, the information they focus on is how it looks when it has traveled through the unconscious. Doing this, it also connects to other information that the subject (person) already have, and puts it into relation to this. We can see introversion as focusing on the relation aspect between things.
Extra- and introversion has a lot of misconceptions, and is often criticized to be too much of a dichotomy, since people aren’t either outgoing or a lone wolf, or even getting energy either from people or being alone. And it’s true, both of those things exists on a scale, described and used in the five factor model. However, in typology and how the concept was originally used, it isn’t about how outgoing you are, or where you get your energy. The latter is, unfortunately, often used when it comes to typology, which negatively influences the way a type is seen.
Another misconception, which in MBTI is very common, is that it would be about external and internal. This however, isn’t the case, even though it’s very understandable that the idea is as big as it is. The idea comes from the name of introversion, which comes from Latin and means “to turn inwards”. However, it does not mean that they focus on only internal information, but rather our internal reaction to external information.
How do we apply this to type?
It is fairly straight forward, if we keep in mind that it does not mean outgoing and lone wolf, or external and internal. We can see how the functions directly applies to this, where for example Te is about the objective characteristics of an object, and Ti about correlating, systematizing and classifying them. This can be applied to any function in different ways, and is that E/I is about when it comes to typology.
Rather than the way extraversion and introversion is usually used in society at large, in typology it has a narrow definition that helps us clarify what the functions and types actually are about, rather than a superficial idea about whether a type is outgoing or not.