What are Inbound and Outbound Rules for Windows Firewall?

If the Windows Firewall is turned off then it will have no effect, and the Inbound and Outbound rules will mean nothing.

• Inbound rules: These are to do with other things accessing your computer. If you are running a Web Server on your computer then you will have to tell the Firewall that outsiders are allowed to connect to it.
• Outbound rules: These are so that you can let some programs use the Internet, and Block others. You will want to let your Web Browser (Internet Explorer, Firefox, Safari, Chrome, Opera...) have access to the Internet, so you will tell Windows Firewall that it's allowed.

Inbound rules allow other system to connect to yours, ex if you would like someone to connect to your windows shares, ftp, web server etc.

Outbound rules allow applications on you system to connect to other systems, ex if you want to connect to a web site, IM or some elses ftp.

Both the inbound and outbound rules will have no effect if your firewall is off.

Outbound means you initiate the connection and the traffic starts flowing outward of your computer to the destination you intended. Example you connect to a server.

Inbound means someone else from outside of your computer initiate the connection to your computer, so the traffic starts flowing inward to your machine. Example your server gets requests from people.

This doesn't mean the actual dataflow. Inbound doesn't mean always inward traffic, and outward doesn't mean always outward traffic, because ports like TCP needs both directions in order to establish the connection, and therefore Windows firewall doesn't block one direction, but the direction of the person or the device that starts the dataflow. So if you only block outbound traffic of Chrome, it means Chrome can't initiate traffic to outside, but Google can initiate traffic to Chrome.