We have all kinds of nests, inside and outside the coop, covered or uncovered. A lot of that is personal preference but in a small coop there may be some real solid reasons for a certain kind. If space is tight, hanging a nest outside can help with space and make them easier to collect. You need to position the roosts so they are not pooping in the food, water, or nests when on the roosts. Chickens poop a lot when roosting.
You don’t want them sleeping in the nests because they poop a lot. Who wants poopy eggs? The simplistic answer is to make the roosts higher than anything you don’t want them sleeping in or on, like the nests. Chickens instinctively like to sleep on the highest spot available. Even with plenty of roost space up high, that doesn’t always work, but it should be your starting point.
In large coops where you can easily position things so they aren’t pooping in things, lots of people use open nests. Dad did and never had a problem. A popular nest on this forum is a cardboard box or cat litter pan with bedding in it sitting in a corner of the coop though plenty of other people get a lot more creative. We can build some complicated things or maybe repurpose a piece of furniture like a bookcase or chest of drawers. I saw a photo on here where someone used a kitchen sink. People care about this stuff a lot more than the chickens do.
