Rabbits need to live in a protected space, especially when they aren't being supervised. There are more dangers outside for rabbits than inside (like predators, bad weather, parasites, etc.), so it usually takes more work and money to keep an outside rabbit secure and happy. Either way, rabbits can be kept inside cages, hutches, dog crates, bunny "condos," dog exercise pens, a "rabbit-proofed" room, etc.
Whichever type it is, a rabbit's enclosure must contain enough room for the rabbit to move around and for all the necessary supplies. See the related question (linked below) about rabbit cages for more details and some useful links.
Rabbits need to be let outside their cage every day for at least four hours so they can play, socialize, and exercise, and so their owners can observe their health and wellbeing (in order to catch illnesses and injuries before they become emergencies!).
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