There is an inside (your network) and an outside (usually the Internet) involved in NAT. You use the ip nat outside to specify which interface on the router goes out to the Internet.
Example: S0/0/0 is the router interface that connects to the Internet.
interface serial 0/0/0
ip nat outside
To contrast, ip nat inside is assigned to the interface that all the hosts in your network connect to. So, in a way of thinking, all of the host addresses that enter the INSIDE interface will be translated into one or more addresses as they go out the OUTSIDE interface.
Hope this helps...