In a brand new video focused on getting your PS4 data over to the PS5, Sony has detailed the fact that you’ll be able to continue to use your PS5 whilst your data from your PS4 gets transferred over.
In terms of how you can transfer all of your data, you’ll be able to do it over Wi-Fi, but Sony recommends that you use an ethernet cord between your PS4 and PS5.
You’ll also be able to just plug-in your external drive to play PS4 games, which looks like a fairly seamless process.
In terms of saves, you can either use a USB or download them from the cloud (but make sure you’ve uploaded them before you trade in that console).