The iMac has an audio I/O chip built into the motherboard, probably something like a Realtek sound chip.
You can use this to play back from Cubase and as an input for Cubase, but honestly, it’s not great. But fortunately there are loads of either USB or Firewire soundcards which are pretty cheap, and very good. I gave you a couple of options that I think are rather good, there are many others.
VSL=Vienna Symphonic Library
EW = East West
Both of these are well regarded makers of orchestral samples, they sound amazingly authentic, but are HUGE and require lots of system resource, lots of RAM and lots of hard disk. It is an esample of how good this computer can be when you are pushing things to the limits
Using an external hard drive for audio files, and sample libraries can be useful because they are big and take up space. There can be a performance advantage from seperating them, and you can always add a bigger drive, but it isn’t essential.
Hope this helps