Use external display only with MacBook? I have a Mid 2010 MacBook. Is it possible to make the external display into the only one, so that I can close the lid and keep working on my MacBook with an external keyboard/mouse and monitor?
Yes. It usually "just works," but if you're having trouble, Apple has detailed instructions:

Apple Portables: How to use your computer in closed clamshell (display closed) mode with an external display