I believe inwales are tapered simply for aesthetics. The ones with tapered inwales are much more elegant, to my eye, than un-tapered ones. The latter just look bulky, chunky by comparison. Un-tapered may be stronger simply because of their larger dimensions, but history has proven tapered inwales highly functional - their smaller dimensions hold up through the test of time.
Which side is tapered? It may not matter as long as the taper is smooth and flows into the rest of the inwale. That said, some models with short tapers like the Old Town 50# model are tapered on the inside. This is a very straight taper, and it ends abruptly at a large angle at or just beyond the point where the deck begins. This made the build easy using short, straight-sided decks. As a counter-example, the Old Town Otca with its longer, curved-sided decks, has long inwale tapers that flow into the lines of the rest of the gunwale.