Yes, we can substitute outer classes wherever we need to have inner classes but Inner classes have advantage in certain cases and hence preferred -
Ease - Why to implement a class outside if its objects are only intended to be part of an outer object. Its easy to define the class within another class if the use is only local.
Protection - Making a call an outer exposes a threat of it being used by any of the class. Why should it be made an outer class if its object should only occur as part of other objects.
For example - You may like to have an class address whose object should have a reference to city and by design that's the only use of city you have in your application. Making Address and City as outer class exposes City to any of the Class. Making it an inner class of Address will make sure that its accessed using object of Address.
Ease - Why to implement a class outside if its objects are only intended to be part of an outer object. Its easy to define the class within another class if the use is only local.
Protection - Making a call an outer exposes a threat of it being used by any of the class. Why should it be made an outer class if its object should only occur as part of other objects.
For example - You may like to have an class address whose object should have a reference to city and by design that's the only use of city you have in your application. Making Address and City as outer class exposes City to any of the Class. Making it an inner class of Address will make sure that its accessed using object of Address.