Some (most) routers won't allow you to connect to local services using your external IP address, therefore you either need to use your local (LAN) IP address (normally starts with 192.168. or 10.0.) or the loopback address (127.0.0.1).
The loopback address is basically an IP address which is assigned to the local machine and will ONLY work on the local machine. For example, 172.0.0.1 is my computer but ONLY to me, 127.0.0.1 to you is your own machine. The local or internal IP will only work for computers on the same local network (if they are plugged in to your router).
In order for people on the internet to play on your server, you need to open the correct ports on your router. Check the link in my sig and have a look at the bottom of the page for a guide on how to do this.
You can connect to your own server with either your loopback or local IP, other people must connect to it with your internet IP.