On this page in the Subversion manual, it says that "When you commit a change to the svn:externals property, Subversion will synchronize the checked-out items against the changed externals definition when you next run svn update. The same thing will happen when others update their working copies and receive your changes to the externals definition."
If you have not specified a revision number for the external, I assume the HEAD revision is used. So, will the subdir managed by the external property update to its HEAD revision each and every time 'svn update' is run against the parent working copy?