Why does this matter? If God is outside then worship is necessary and needed to be in contact. It makes sense to bribe (offerings) and cajole (if you do this, I’ll do that) in order to influence and gain attention. It also means that God has nothing to do with the rest of the world, so that becomes my plaything to do with what ever I please.
If God is inside, then a search for my authentic being is in order so that I can find and maintain a relationship with the divine. What happens in the ‘world’ is of little consequence, since the relationship is internal. Then the world is a distraction and interrupts that relationship and is best discounted and/or ignored.
However both systems thinking and our personal experience suggest that immanence is the correct understanding, God is bothinside and outside! Systems’ thinking says that all things are connected and that all things are interconnected. A part of our personal experience is characterized by the word synchronicity, which is how we explain the experience of needing something or thinking about someone and having that information or person appear spontaneously, or ‘out-of-the-blue.’ How could that happen if there is no connection? If there is a connection, then isn’t that God?
An externalized view of God makes the suggestion that God has human form a reasonable possibility. An internalized view of God makes the possibility that ‘I am God’ a reasonable option, however only the understanding that ‘God’ is immanent clarifies the relationship between the internal and the external and gives both value!
Seeing God as external poses the risk of devaluing the rest of the world and others. It can also be subject to wishful thinking as God becomes who we want s/he/it to be allowing us to give to the divine our own fears making it acceptable to destroy what ever we fear, in Gods name.
An internalized God runs the risk of ego attachment that leads to the illusion that ‘I can do anything’ and that ‘I have control over the world.’ Then what ever we can do we feel we should do and if it ‘feels right’ then it’s OK. The implications and consequences are not important.
An immanent viewpoint, on the other hand, puts all responsibility squarely on our own shoulders. We become responsible for our actions and for acting with best interests of everything in mind. This can be a terrible place if actions are viewed with a judging eye or without compassion.
It all seems to boil down to the kind of relationship one has with the Divine, fearful, loving, respectful or reverent. Wherever you see the Divine, however you relate to It will be your experience and your relationship to the world!