An inside candle indicates that price is trading within the previous time period's range. An outside candle indicates that price has broken out of the previous time period's range in both directions. These candlestick patterns can indicate to a trader whether a chart is currently trading in a range or breaking out in an attempt to swing or trend in one direction.
An outside candle indicates that the price action of the new candle occurred outside of the previous candle. Price action must have a higher high and a lower low in comparison to the previous day to qualify as an outside candle.