it should be applied to the vaginal tissues
some come with an applicator to make it easier but most are generally a "fingertip" worth (or 1 gram) into the vagina and a smalll portion on the vulva, the external area, to help with the thinning of the tissues due to loss of estrogen and can impact the urethra leading to symptoms mirroring UTIs and unnecessary doses of antibiotics.
https://www.goodrx.com/estradiol/applying-estrogen-cream