Hi,

When casting the location spell, you get some information:
Sector
Internal coordinates
Exterior coordinates
Facing

I imagine that the sector indicates the position/region on the world map?
What do the exterior (or external, I don't remember by hard) coordinates stand for? I can't quite make sense of it.

Exterior coordinates refer to the outside map, internal coordinates are for dungeons, cities or towers. So inside a dungeon you have always the same exterior coordinates (which is the point of the dungeon on the outside map) and only the internal coordinates change depending on your movement.

Each map has the size of 16x16.

To add to what PaterAlf said: The letter/number combo refers to which section of the world map you're in. These use a letter to determine the column, and number for the row, so you get things like A3 or C2. Use the world map (included in the extras with the MMpack) to see which section is which.

For external coordinates, this tells you where you are within each section of the world map. Internal coordinates tell you where you are within each floor of an indoor area. Every map, both outdoor and indoor, is a 16x16 grid, with coordinates given numbers from 0 to 15. These are mapped out in x and y like you would do in a graph, so if the location spell says you're at (3,12) it means you count from the bottom left corner of the map, and go four spaces to the right (0,1,2,3) and 13 spaces up (count 0 to 12). That's the square your party is standing on.

The location spell is critical for making maps and figuring out where you are, as sometimes you'll run into magical traps that move your party without warning, or prevent you from moving forward, or spin you around, or all sorts of other things designed to make you lose your bearings. Navigating and mapping are some of the main challenges in the game.