nationals and foreigners; Japanese and non-Japanese people
Refers to both Japanese people and foreigners collectively. Often used in contexts like international events, workplaces, or communities where both groups are present.
This event is open to both Japanese and non-Japanese people.
Japanese and foreign employees work together at the company.
Compound of 内 (inside, here meaning 'domestic/Japanese') + 外 (outside, 'foreign') + 人 (person). The exact historical derivation is uncertain, but the word is formed from these elements to mean 'both domestic and foreign people'.