Used to declare an object or function that is defined elsewhere (and that has external linkage). In general, it is used to declare an object or function to be used in a module that is not the one in which the corresponding object or function is defined:

/* file1.c */
int foo = 2;  /* Has external linkage since it is declared at file scope. */
/* file2.c */
#include <stdio.h>
int main(void)
{
    /* `extern` keyword refers to external definition of `foo`. */
    extern int foo;
    printf("%d\\n", foo);
    return 0;
}

Things get slightly more interesting with the introduction of the inline keyword in C99:

/* Should usually be place in a header file such that all users see the definition */
/* Hints to the compiler that the function `bar` might be inlined */
/* and suppresses the generation of an external symbol, unless stated otherwise. */
inline void bar(int drink)
{
    printf("You ordered drink no.%d\\n", drink);
}

/* To be found in just one .c file.
   Creates an external function definition of `bar` for use by other files.
   The compiler is allowed to choose between the inline version and the external
   definition when `bar` is called. Without this line, `bar` would only be an inline
   function, and other files would not be able to call it. */
extern void bar(int);