The loop we are referring to is Interstate 495, aka beltway, aka Capital Beltway, aka the parking lot (especially on Friday afternoons). Us locals use this loop as a frame of reference when talking about directions or location. When referring to the inner loop, it is the clockwise direction of traffic on the Interstate. When referring to the outer loop, it is speaking to the counter clockwise direction.
What about when people ask, "do you live inside the beltway?". Again, this means, inside of the 495 loop as opposed to outside of the beltway.