Both defenses come into play, depending on the offense your opponent puts forth.
For example, if you're a guard playing out on the perimeter and you drive to the hoop, does the guy defending you just stand outside, or does he follow you inside and still try to stop you? Also, guards can come down low to try and double team, or to pick up a man that someone else left open...
Long story short, if your opponent only shoots 3-pointers, loading up on Outside defense is great. If they drive, look inside, and have wingmen that shoot from everywhere on the court you're going to want to balance it out a bit.
Hope this helped.
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