An extension to standard LTI, external tools can be configured to appear when a student is submitting content for an assignment. When a tool is configured, users will see an additional tab during assignment submission for assignments that accept online submissions. If a user selects a homework submission tool, a popup will appear where the external tool will be loaded. The tool should direct users to select or build some piece of content, then submit that content to the tool. The tool will then redirect the user to the LTI success URL with some additional parameters. Canvas will take this information and submit it for the current user as their submission to this assignment.
I would really like to see an end-to-end example of this!