An externality is a cost or benefit created by an economic activity that falls on people outside the transaction — pollution is the classic negative example, while a well-kept garden that lifts a neighborhood is a positive one.
Location value is itself a vast positive externality: the worth of any site is created by everything around it. Returning that value to the community, rather than letting it accrue privately, is a way of giving a shared externality back to those who produce it.