I did a mix with mine. I can see definite advantages to both styles. When I built my trailer I had two design criteria that influenced the wheel placement. I wanted to fit a queen size bed inside and I wanted to match the trailer's wheel track to the truck. I wound up somewhere in between fully inside and fully out. There are advantages and disadvantages to both:
The biggest (and only real) advantage of wheel wells is the additional space you get by building the trailer out over the wheels. You might also have a slight aerodynamic advantage. There are significant disadvantages though:
-The trailer is wider aft of the axle. Not a big deal freeway cruising, but it's easy to forget that the rear end of the trailer will swing wide when maneuvering slowly in tight places
-It's harder to see behind the trailer, especially if the trailer is close to or wider than the tow vehicle width.
-Wheel placement is trickier because you can't see the wheels as well
- Construction can be much more involved. There's less leeway when it comes to axle placement. For example, if you build the trailer and then realize that it likes to sway, moving the axle is not really a feasible option, your only choice is to move weight around. Going to a different tire size can also present problems.
That's not to say that fenders are a superior way to go either.
- They can stick out. You might be able to drive the TV straight between obstacles, but that doesn't mean that the trailer will necessarily make it without a wheel or two going over an obstacle.
- Some people are apparently extremely offended by the fenders on the outside
- You do lose cargo volume compared to the track width.
So why didn't I just build my trailer completely over the wheels instead of halfway? My trailer is stored in the garage alongside a car when it's not in use, a wider trailer would be that much less space for getting around it. The width when towing is great. I can see the wheels if I angle my mirror down slightly, I can pull up alongside a curb without worrying about the trailer trying to climb up, and if I cut a corner around a tree too close I'm hitting tire and fender first, not the body. Reward visibility is great to the point that I don't need tow mirrors. Inside is just right. The queen size bed goes from wall to wall, making it sleep much bigger than it would seem because you're not going to fall off the bed. There's enough room for me, my wife, and the 2yo to sleep side by side. My 5yo can also fit on the queen size bed, but then it starts getting a bit snug. No biggie though, there's a bunk bed up forward that is downright spacious for her. There's another bed underneath it for the 2yo when he gets a little bigger. We've got plenty of room for all the crap that a family of four brings camping.
@rebar Have you got any pics of your trailer build? Mine is in my sig line.