Inside and outside bets in roulette differ mainly in placement and odds. Inside bets are placed on specific numbers or small groups of numbers within the main grid, offering higher payouts but lower chances of winning. Outside bets are made on broader options, like red or black, odd or even, or larger number groups, with lower payouts but higher odds of winning. This distinction allows players to choose between riskier, high-reward bets and safer, lower-reward options.