[2023] do farm plots need to be outside or can they work inside

Inside can work, but it has to be within a certain range of 'outside' or of a transparent block that itself has direct access to the sky. You can, for example, build your farmplots into a green house. You can't put them down at bedrock with no access to sunlight whatsoever.

It works kindof like minecraft lighting if you understand that- Sky produces light and 'splashes' around the top most block and illuminates the area, transparent blocks aren't considered when determining the top most block.. A farm plot placed in that 'splash' area will grow.

Hope that makes sense.