The reason was that I wanted to use data from STDIN and pipe it through extprog. When doing

while (<>)
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the loop will run as long as data kept coming from STDIN, and all data will be piped into extprog inside the loop.
This as opposed to doing

while (<EXT>)
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which would require extproc to produce output for the loop to run. Since extproc requires input to produce output it would never run, atleast not the way my example was written.