Nerves normally move (translate) across bones and muscles when you move your limbs. If scarring occurs, it may trap a nerve, so that when you move your limb, it stretches the nerve causing nerve damage, pain, and internal scarring of the nerve. An external neurolysis is when you remove this scar tissue around the nerve without entering it.
Although some scar tissue inevitably occurs with surgery, it is usually not as much as that which occurs after certain traumatic injuries. Therefore, the goal of this surgery is to provide a friendly environment for an irritated nerve.