Booting from an external disk I understand that I can boot OS X from an external disk, but is that just as a means of recovery?

Can I actually setup and use OS X from an external disk to do work and save documents etc?
You can use Option/Alt Key:


Shutdown your Mac
Make sure you have your external disk connected
Press Power Button to turn on your Mac
Before Apple Logo appears press Option/Alt Key and hold it
It should show all connected bootable disks
Select your external with arrows and press Enter


If your disks does not appear make sure that it is formatted with a GUID partition type.

For more info check this Link

I hope it helps you