Freehub: why are the pawls on the inside surface not the outside?
I am going to combine the comments into an answer - feel free to improve. 

The main benefit is the larger circumference of the ratchet surface. 

This means for the same torque on the wheel, there is less total force on the ratchets holding the freewheel. It also means there is room for more pawls, meaning less force on each individual ratchet. This allows smaller ratchets and pawls, meaning you can have more of them, meaning even less force. 

Additionally smaller ratchets and pawls allow smaller angles before engagement of pawls locking the free hub - less slop when starting to pedal after free wheeling.  The smaller angle before pawls engage also means the pedals have less time to accelerate - meaning the forces and wear and tear on the engaging pawls are lower. 

Having more pawls means the freewheel is more likely to operate if one fails to engage. 

Conversely, a smaller diameter ratchet would be able to support fewer pawls, which would have to be much stronger or likely to be less reliable and engage less quickly when pedaling is resumed after freewheeling