I remember thinking it was so weird and gross when I first heard about people letting their dogs inside!
i now live in an urban area and walk my (little) dog at least twice a day, which gives us both exercise (5+ miles/day), and she seems pretty content with the amount of outdoor time she gets.
Also note that in these contexts there are "inside dogs" and "outside dogs" depending on if they get let into the house or not.
Yes, I had for years an "outside" dog and an "inside" one, the funny thing is how they divided their competence for "alarm", the outside one would bark if anyone arrived within earing distance, then would stop barking when the car or truck actually arrived, and immediately the inside one will take where the former left.
Still there was a small area on the side of the house that was "free", the outside dog somehow believed it was not (anymore) his business, and the inside one thought it wasn't (yet) his.
Head of security, bringer of cows at milking time, and announcer of arriving delivery trucks. No proper farm can do without.
Seems to me like something a powerful sense of smell would make trivial. A dog can instantly detect the points past which its human pack members never venture.