"The water is in the pool."
Translation:Vannet er i bassenget.
Yes, "innenfor" is mainly used to express that you're inside some sort of boundary, like fence for instance. It doesn't have to be a physical boundary either, it can be used to express that something belongs to an academic field, for instance:
When talking of physical things, those with bigger openings take "i", while those with smaller openings, the things that are able to enclose something, usually have the option of taking "inni/inne i". This is similar to the in/inside divide in English.
There's quite a bit of overlap between "i" and "inni/inne i", with "i" being the one doing the overlapping, but this is something you will get a better feel for with more exposure to the language. If you're unsure, "i" is a pretty safe bet. :)
Some nouns, and even verbs, take certain prepositions without much rhyme and reason to it, and those you'll just have to learn. Certain rooms in a house can take "i" while others take "på", for instance.