I use mini kegs 1.75 gallon, and keep them on the top shelf of my fridge. For CO2, I use paint ball bottles (24 ounce), which fit nicely behind the keg. One bottle services both kegs. I just switch the hose from one to the other.
There is no inherent advantage of outside or inside, except perhaps at the bitter end of the bottle, when it is essentially empty anyway. The bottle pressure will be higher, but by the time you reach that point, the bottle is for all intents and purposes empty.
It's entirely a matter of convenience.........A bottle inside takes up space, which may or may not be important. A bottle outside means having a hole in your fridge / kegerator, which no matter how well it is sealed, will carry warmth into the cooler via the metal passing through. Less so for plastic. But it probably is insignificant in terms of cost for most of us.
H.W.