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I have a destination page goal D and my first required step page is A. There are couple of pages between A and D(let say B & C). I want to measure conversion from A to D.
Q.1 Is it necessary to add B and C in my funnel?
Q.2 Consider a case where B is an external URL. Will this fact change the scenario?
From https://support.google.com/analytics/answer/2976313?hl=en
Backfilling Funnel Steps
What happens if someone skips one of the steps in the funnel?
The Funnel Visualization report backfills any skipped steps between the step at which the user entered the funnel and the step at which the user exited the funnel.
For example, let's say your funnel is defined as /step1 > /step2 > /step3 > goal, and a user navigates from /step2 to goal, skipping /step1 and /step3. In the Funnel Visualization report, you'd see an entrance to /step 2, a continuation to /step 3, and a continuation to goal.
So you don't have to add B and C to your funnel. If you do add them, the user skips them and goes straight to D, then the funnel visualization report will back fill them and make it look like the user hit both pages B and C on their way to D.
If a step is on an external URL it doesn't make sense to include it unless you can put your GA tracking code onto that external page. If the tracking code isn't there GA won't know when users hit that page. The only thing in your funnel report will be the backfilled data. You won't be able to see how many users drop off on that step.
From https://blog.kissmetrics.com/conversion-funnel-survival-guide/
Pageviews Can Occur Nonsequentially for a Funnel Match
Our example funnel and goal pages were defined above as:
catalog.php > description.php > inquiry.php > thank-you.phpThe following sequences of pageviews during a visit would match the funnel definition and count towards the Funnel Visualization:
Matching visit: catalog.php > description.php > inquiry.php > thank-you.php
Matching visit: description.php > catalog.php > inquiry.php > thank-you.php
Matching visit: catalog.php > maps.php > description.php > inquiry.php > thank-you.php
Middle Pageviews Don’t Have to Occur for a Funnel Match
Using the same example funnel as above, the following sequences of pageviews during a visit would also count towards the Funnel Visualization:
Matching visit: catalog.php > inquiry.php > thank-you.php
Matching visit: catalog.php > maps.php > inquiry.php > thank-you.php
So, you don't have to necessarily include the middle step pages. But as Stephen Ostermiller mentions in his answer, if you add B and C in the funnel, GA will backfill them in the funnel visualization report.