When you start to solve a problem in TDD, one of the questions that most of the developers have is about the correct place to start testing the code.
Is it better to start with a high level functional test (Outside-In) at a user story and drill down into the low level tests as you progress or to come with an initial low level design and then start writing tests from the lowest component (Inside-Out) in the design and progress to the higher level components?
A short answer would be that it depends on your / team's coding preference or approach.
If you're not sure how your code should look like or how it will interact or communicate with other parts of your system, it's better to have a small design discussion with the team to identify the best possible design solution and start with the low level component and let it evolve as you write more tests.
But if your design already exists (Layered approach, where the layered components are identified like controllers, services, repositories etc.), you can start with the Outside-In approach.
As you see, Inside out testing implies a developer would probably consider the high-level design and break them up into low level components that interact with each other to provide the desired functionality. The developer thinks about how each component will be used by its client components and tests accordingly.
The advantage is that the team can deliver working software quickly as they have started with a proper design in his mind. However, since the code delivered was not written considering the high level user requirements, it may produce code that doesn't go well with the YAGNI principle and also have a risk of not meeting the actual functionality.
In the Outside In approach, the part of system that has the closest correlation to the user requirements are tested first, guarantees that the critical parts of the application is tested first. Here the focus is more on how the user interacts with the system, rather than how the components interact with each other. The test cases generated hence supports the usability of the system.