is it better to close the MacBook with an external display or keep it open?

2 reasons to keep it open:

• True Tone
• Heat

True Tone

Recent Mac Books feature True Tone, which means they automatically adjust the screen colors to resemble external ambient lighting conditions. This feature can make the screen appearance more pleasing to the eye in some lighting situations. And it applies to external monitors, too. When you keep your Mac Book open, your external display will adjust - if you close it, this feature is disabled.

Cooling

I also noticed that my other (older) Mac Book used to get hot and more often turned on the full-speed ventilation when the lid was closed. So I guess the cooling works better when the lid's kept open.

I concur 100% with ParacelsusZwickl on the heat issue. In this Apple article on notebook computer temperatures:

Keep your Mac notebook within acceptable operating temperatures - Apple Support

is this:

IMHO, closing the lid is putting something over the keyboard!

Some Macbook Pro sub-models take in cooling air through the keyboard. They have to breathe.

An ancillary issue is that some users running external displays with the lid closed do so in order to tuck the Macbook Pro away in a vertical slot on the workstation to save space. The majority of users place the computer in the slot with the hinge down against the desk. Guess where all MacBook Pros exhaust the heated air? Yup, the hinge.

Blocking the exhaust will run up temps as fast and blocking intakes. Macbook Pros see enough extra heat when drive and second display. It behooved you and your budget to make sure yours stays cool.

I lost my first Macbook Pro to overheating and don't want to enjoy a second helping!

In my opinion, it is way better to leave the display open, but also to use it in combination with the external display in an "extended desktop" arrangement like this:

My son puts his big External display up on a block of wood, and opens the built-in display below.

Better in what way? Neither will harm your battery, other internals or attached accessories.