In google external keywords search tool, how should I interpret the competition numbers?

[Kflo]

E.g. how to use that info. to better my keyword choices?

[RyanKent]

That information applies to advertising, not SEO.

If you are seeking a tool to help you understand organic keyword difficulty, you can try the SEOmoz Keyword Difficulty Tool

What you need to understand most is even the best SEO tools only have value when used by someone who fully understands the process (i.e. can perform the task without the tool) and fully understands how the tool operates. In addition, the person needs to have experience using the process and tool to gain the most value.

As a direct result of good SEO techniques, small businesses have moved out of their homes and into offices then grown into mid-sized businesses. Mid-sized businesses have grown into large businesses, and large businesses have increased sales by millions. SEO is a big field. There are single domains which have sold for millions of dollars. There are sites which have cost millions of dollars to build.

If you want to start learning SEO, an excellent place is here: http://www.seomoz.org/beginners-guide-to-seo

Beyond that, it takes a lot of time and dedication. I have been involved with SEO on various levels for years and I still learn every week.