As reported earlier, the PlayStation VR will have an external processing unit after all- however, it’s not as bad as many had originally feared. According to developer sources, Digital Foundry is confirming that the unit measures up at 140x140x35mm. By comparison, the Wii measures 215x157x44mm, almost 2.2x the overall volume.
The external processing unit is necessary to supplement the PS4’s hardware, and allow for more processing juice that is necessary to render good looking games in VR at 120 Hz. According to Digital Foundry, the processor is a pass through- it sits between the PSVR headset and the PS4, and all input/output signals must pass through it.
The processor also includes ports for HDMI In, HDMI Out, micro USB, and the power input. What exactly the external processor will be used for is unknown right now- but it is clear that any fears that people may have had about the PS4’s (in)ability to handle VR rendering were unfounded.