Inbound Web Service:
Inbound web service is when Salesforce exposes SOAP/REST web service, and any external/third party application consume it to get data from your Salesforce org. It is an Inbound call to Salesforce, but outbound call to the external system. Here, Salesforce is the publisher and external system is the consumer of web services.

Outbound Web Service:
Outbound web service is when Salesforce consume any external/third party application web service, a call needs to send to the external system. It is an Inbound call to the external system, but outbound call to Salesforce. Here, external system is the publisher of web services and Salesforce is the consumer.

There are two commonly used web service:

• • SOAP(Simple Object Access Protocol)
    • SOAP is a web service architecture, which specifies the basic rules to be considered while designing web service platforms.
    • It works over with HTTP, HTTPS, SMTP, XMPP.
    • It works with WSDL.
    • It is based on standard XML format.
    • SOAP Supports data in the form of XML only
    • SOAP API preferred for services within the enterprise in any language that supports Web services.

• • REST (Representational State Transfer)
    • REST is another architectural pattern, an alternative to SOAP.
    • It works over with HTTP and HTTPS.
    • It works with GET, POST, PUT and DELETE verbs to perform CRUD operations.
    • It is based on URI.
    • REST Supports both XML and JSON format.
    • REST API preferred for services that are exposed as public APIs and mobile, since JSON being Lighter the app runs smoother and faster.