A Low End Mac article describes it well: http://lowendmac.com/1998/termination-explained/
The tricky part is to figure out how and when to terminate. The best option of course is to find a case with built in termination, usually configured by an external manual switch. However those are reserved for newer cases, and usually are SCSI2 or 25pin connectors, not the 50 pin centronics.
Should you only be able to find the 50 pin centronics connector (most common), how you terminate depends on how many devices are in the SCSI chain.
If the external HD is the only device in the chain, then it is best to use a pass-through terminator (http://www.scsi-cables.co.uk/images/site/active_terminator_cn50_pt.jpg).
If not, then you will need a standard terminator at the end of the chain (example: http://www.scsi-cables.co.uk/images/site/passive_terminator_cn50.jpg).
My experience has shown that you get best results using the bottom connector on a device to go to the computer, or the device closest to the computer in the chain (ie computer <--> Bottom Connector HD ; Top Connector HD <--> Zip Drive (Zip Drive terminates Internally) ).
Hope that helps.
