I place water inside the coop, inside the run, and outside my coop. In cold or rainy weather they tend to hang around in their coop quite a bit, so they would be thirsty. Good water intake is better for preventing crop problems or dehydration. We have a large coop in a small barn, so plenty of room. If something comes up that I cannot let them outside first thing in the morning they are all set to just stay in the coop. Also after a big snow, they will not come out unless I shovel a large path out into the yard. Some with tiny coops probably can't fit water inside or it may get spilled. So, you need to do what is best for your needs.