That's right -- when you close the lid, the computer goes to sleep, and, obviously, the keyboard and trackpad are unavailable to wake the computer.
As heathpitts said, with an external keyboard/mouse, you can just hit a key on it to wake the computer, and the video should show on the external monitor.
And yeah, as far as I know, there is no closed-lid battery-only was to operate the computer. You need external power.