The obvious answer is "both". But I assume both isn't an option, due to timing, money, or rules.
As discussed in this thread, the term "externship" is not well defined. In some institutions, it refers to an observership -- you just follow along, not allowed to examine patients or access the medical record, not allowed to write orders. In others, it refers to a medical student rotation for an external rotator.
As mentioned above, you should clarify what your actual duties would be on both rotations, to the best of your ability. A true "SubI" is a "Sub-Internship" -- it means that you do everything an intern is expected to do, except usually with a smaller census (often 1/2). You would be responsible for prerounding on all of the patients, presenting them on rounds, writing all orders, writing a daily progress note, preparing discharge summaries, answering calls from nursing, and signing out the service at the end of the day. An Externship can mean many different things. From your description, it sounds like the two rotations are very similar (although one is all inpatient).
In general, the Univ letter will carry more weight, especially if you're applying to Univ programs. However, if you want to go to this community program, then rotating there and performing well, esp if you're working with the PD, could move you way up their list. So what to do depends upon how competitive you are, and what you plan to do. If you have competitive USMLE scores and plan to apply to Univ programs, then you should do the Univ rotation. If you have a weaker application and are worried about matching at all, then you should do the community rotation.
You might get to "do more" in a community setting, if there aren't other students and less residents around. You might get to see sicker patients at the Univ hospital.
