As previously known, PlayStation 5 is confirmed as backward compatible, and during today's presentation, more about this was revealed by lead system architect Mark Cerny. It turns out PlayStation 5 will still support external hard drives, and Cerny explained those are ideal to use for playing older games (as they don't rely on SSDs):
"The kind of storage you need depends on how you're going to use it. if you have an extensive PS4 library [...] then a large external hard drive is ideal. You can leave your games on the hard drive and play them directly from there, saving the pricier SSD storage for your PS5 titles, or you can copy the PS4 titles directly to the SSD. If you're purpose in adding more storage is to play PS5 titles, though, ideally you will add to your SSD storage."
Cerny also confirmed they've picked the "top 100 PS4 games by playtime and they're expecting most of these to be playable at PS5 launch," before later adding that he expects "almost all" PS4 games to make it over to Sony's new console.