S. R. Faruqi:

[SRF discusses both this ghazal and the following, formally identical one, {1659}, together in {1658,1}.]

By means of God's qualities 'outside' and 'inside', he has created a new idea: that when passion arrives in the heavens, then it appears in the form of the 'lofty realm' (=the inside); and when it comes to earth, then it adopts the form of the world (=the outside). In this theme a glimmer of Vedantic thought and 'unity of existence' [va;hdat ul-vujuud] can be seen.

[See also {1658,4}; {1659,2}.]

FWP:

SETS
MOTIFS
NAMES
TERMS

Passion is the inside of 'that' outside-- but what or which outside? We never get an answer in so many words, but the second line tells us that 'in that direction' passion is a 'lofty/elevated realm/condition', so it's reasonable to think that it refers to a heavenly or spiritual realm.

As usual, however, the choice between us and is not indicated by Mir. When in doubt I always use us , for reasons explained here. So we could equally well choose is , to make it 'this' outside. But the rest of the line immediately makes the question feel moot: since insides and outsides are all passion, what difference does it make where we position ourselves?

In the second line, Mir uses the archaic spellings uudhar and iidhar , so that he actually does control our readings in this case. No doubt this is because he doesn't want us to position ourselves in the lofty realm above. We are to situate ourselves in this world-- but we are to see it as made of passion.