An inside joke might be an offhand word or comment that references a shared experience that people in a friendship have had. The comment does not tell the whole story of the experience, but is just enough to let on to one person what specific incident the other is talking about. This phase would probably mean nothing to an outsider, but to someone in the friendship this phrase will cause a glint of recognition in the persons eyes or maybe even make them dissolve into peals of laughter.
I feel that many academics, such as William Rawlins, who study interpersonal communications completely overlook the phenomenon of the inside joke. I think that inside jokes help to strengthen any friendship by recalling shared experiences in language that only the friends would understand.
Yeah so, I'm a communications major, it's actually harder than you think.