storage options for MacBook Air

I've decided to setup my MacBook Air for digital audio, all of my music is currently saved on a WD external hard drive. My question is, would it be better to keep it on the external hard drive or move the music over to the MacBooks' 256 GB solid state drive? are there other storage options I should investigate? thank you!
Without knowing the type of player you plan to use it's tricky to suggest anything. 

Seems to me that the portable benefits of the MB Air are lost when it gets connected to a wired up external drive and DAC. 

Having you considered a streamer w/ internal storage? One that you could control with your MB Air or a phone/tablet?
Haven't considered anything else since this setup mainly includes pieces that I already have which is the MB Air running iTunes connected to a Ultra Fi DAC-41 USB DAC. My files are all AIFF which is why I'm sticking with iTunes.
The question remains, do I keep my music on the external drive or copy music to the solid state drive of the MacBook? 
When I had my MAC Book Pro, I stored all my music on an external  LaCie hard drive (used Thunderbolt cable) and not on the MAC Book Pro computer.   I never tested this but my retailer said playing music from an external hard drive would sound better then if the music was stored on the MAC Book Pro computer.  My LaCie hard drive was backed up to a 2nd hard drive.

I have since replaced my MAC Book Pro Computer with the Aurender N10 Music Server.   My audio system sounds more open, more natural, clearer, better bass and I am very happy I purchased the Aurender.  The ability to switch back and forth between Tidal music streaming and my stored albums on the Aurender is now a very easy process (one mouse click).  The Aurender iPAD app is much easier to use than my MAC Book Pro computer.  Album selection is also excellent with several different album selection choices available.  The Aurender N10 Music Sever is highly recommended for its great sound quality and ease of use. 

I also use the AIFF format. And iTunes.

So the answer depends on the number of albums/songs in your library and if you plan to add to it.

I assumed that the external drive was used because you were running out of disk space on the MB Air. Which, as your library grows, is gonna happen.

For example, my Rollings Stones "Let It Bleed" CD to AIFF rip is 455 Megabytes. Not sure how much overhead Mac OS (or OSX) uses on that MB Air. But if an album runs 450 Megabytes per CD you could calculate how much of your library it could hold. 

If you like iTunes (and I do though I use Roon for playback but hear no difference in SQ from iTunes) then maybe consider a MacMini to run iTunes and output to the Ultra Fi. You control the Mini iTunes from the MB Air using Screen Share. That existing external drive could be connected to the Mini. 
The MB Pro you had probably did not have a SSD drive which I'm guessing is why the retailer recommended the external LaCie hard drive. I've read that it's always good to keep music on an external drive.
I've also read that SSD makes a noticeable improvement over standard hard drive and my MB Air comes with built in SSD which makes my decision difficult.

My library will fit in the MB Air at this point, but you're right 250 GB will run out when my library grows. What Mac are you using?
I control itunes using the remote app and it works very well, no need for two different computers.

I listen to music on a (mostly headless) MacMini. The music is managed by iTunes. I've got almost 3/4 TB on a 2TB WD drive connected via firewire to the Mini.  The Mini USB out to an LH Labs DAC to HiFi.  This is my Roon core. 

I rip and control the MacMini from an iMac which is a Roon remote. The iMac has an Oppo HA-2 DAC/headphone amp for local listening

Both are wired via ethernet and I use Apple's Screen Sharing to manage the Mac, add music files etc.  

Your MB Air is a sweet portable device, an excellent remote control to the hifi stereo but capable of playback to personal listening too. 
Scar972, It can make a difference if your external (mechanical) storage is acoustically noisy.  Other than that your DAC has asynchronous (I believe) input, meaning that timing of the computer and DAC are separated.  What you send to DAC is data - not the music (you can use computer at the same time).  Music is recreated in the DAC by added timing (separate clock for D/A conversion).  I would not transfer files to SSD drive for two reasons.  First is better flexibility of external storage and the second is the fact that it can make your SSD last longer.  Your SSD has limited number of writes for each sector.  In order to extend it drive constantly reshuffles sectors to minimize the use of each sector.  The more free space you have the more years it will serve you.  Don't forget to make backups.  I make two backups to prevent situation when something bad happens during backup destroying both disks.  In addition my second backup, that I keep at work, gives me protection from fire, theft etc. 
Hello Scar972 - I have a MacBook Air and just moved to an Aries Mini for playing ripped files and streaming Tidal, Spotify and internet radio.  My music files are ALAC in iTunes and are on an external hard drive (plus backups).  Space being limited on the SSD of the MBA, I went external.  I could not tell a difference sound wise.  It should be easy to do the A/B comparison and decide for yourself.  I will say, if prices for solid state come down, I'd prefer to use solid state for storage over a mechanical hard drive.  Just seems the better tech for quickly transmitting data...whether or not it improves sound.  

Back to the MBA...I was also using BitPerfect ($10 from the App Store) to run things.  I highly recommend it for improved SQ over "native" iTunes if you stay with the MBA.  Also, if you go to an external hard drive for storage you can experiment with other formats besides AIFF...ALAC and WAV, at the least since space won't be an issue.

FWIW, the Aries Mini reads all my iTunes/ALAC files no problem.  I still use the MBA into a Schiit Asgard 2 via Dragonfly for headphone listening late at night.  

Hope that's helpful.
Scar972, Ignore my argument about longevity of SSD. Music library doesn't add any burden since it is always read operation during playback.

The original question was to store music on an external drive or on internal drive. For 1, in time your ssd will be too small to hold all of your music. The 2nd issue is that hard disks are noisy to have in your audio room.
options? Plenty.
1) use a cloud drive (NAS drive essentially). This drive can be in another part of the house. I use the seagate central 5TB disk. used to use this for my Audirvana library from my Mac mini.
2) share a disk from another server. This is what I use now. Explained later.
3) hook up an external disk to your router.
4) I have a 2TB battery operated disk that holds part of my library. I mainly use this when I travel since my iPhone/iPad can connect to this drive wireless and the my iPhone/iPad connect to a cypher lab dac which sounds fantastic.

i stopped using iTunes for my music room years ago because no matter what software you used on the Mac to read the music. It didn't sound that good. When Audirvana 2 came out with its own library instead of using iTunes, music sounded much better. About 8 months ago, I started auditioning music servers and most that I heard bettered the Mac mini setup. 

So I replaced my Mac mini setup with the Auralic Aries. I since setup my Mac mini as an OS X server running minimserver. I have 15TB of hard disk on the Mac mini server using a raid 1 setup for 2 - 5TB drives for my music. I use Bliss that keeps the tagging and album art insync. This server is in the basement 2 floors away from my music room. I use the seagate storage central cloud disk to backup the OSX server.

bottomline, you have many options

Thank you for all the comments!
Looks like there's a lot of options and the Auralic units seems popular, this is something I'll have to look into a little later. I need to decide how much of a commitment I want to make to digital to shell out for a music server. I have so many sources to play with and have fun with all of them.
I'll setup what I have and add BitPerfect to see how it all sounds.
I have been doing the computer audio for about a year 256 gb. Is pretty small maybe 2000 cds not to mention high Rez. Files. It is my thoughts that the less the computer has to do the better the sound. So keep your music separate. 
I have set it up with the music on an external HD and really pleased with what I'm hearing at this point, thank you!
Hi scar - 
Glad things are sounding good.  If you haven't yet, get the BitPerfect.  It's only $10 bucks and easy to install and set up.  Might improve the SQ even further for you.  The BitPerfect people also provide great tech support.