"Hunden står utenfor butikken."
Translation:The dog is standing outside the shop.
It was a simplified explanation. When using 'outside' as in relation to something, in this example 'the store', you should use 'utenfor'. When you're walking outside, you can use 'ute' and 'utenfor', depending on whether it's in relation to something. "Jeg står utenfor" means you're standing outside in relation to something. "Jeg står ute" means you're simply standing outside.
'ut' is often accompanied by a verb, such as 'går': "Jeg går ut" = "I'm going out". It means you're heading to the outside.