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External 404 vs Internal 404
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Which one is bad?
External - when someone adds an incorrect link to your site, maybe does a typo when linking to an inner page. This page never existed on your site, google shows this as a 404 in Webmaster tools.
Internal - a page existed, google indexed it, and you deleted it and didnt add a 301.
Internal ones are in the webmaster's control, and i can understand if google gets upset if it sees a 404 for a URL that existed before, however surely "externally created" 404 shoudnt cause any harm cause that page never existed. And someone has inserted an incorrect link to your site.
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What exactly do you mean by "bad?"
They are both undesired. You certainly won't be penalized for having a 404 specifically, but you may see a decrease in ranking if it affects your site structure or if the pages you lost were passing along page authority to other pages.
You should do everything you can to limit both. Both are equally bad.
Let me know if I understood the question correctly. Cheers!
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