Love the dog and kitty pix, Amy!
My ancient cat was an indoor outdoor one until he was about 18 and lost his hearing, and was no longer allowed out unsupervised.
Of our 4 new cats, the two boys came from a shelter and have never been outdoor cats. The two girls were outdoor strays and have no desire to go back out again. Because one of the females has a flea allergy, and I've spent at least a thousand bucks to help her deal with it, I'm glad that none of them go outside. They play with each other, they have toys scattered all over the house that they take out of their toy basket, and when we get home we play with them, too.
They also have a cat door out to a screened porch which overlooks a deck. I line the deck railing with birdseed in the morning, and we all watch the birds while I'm having breakfast. I'm sure there would be less birds if these guys were outside; they are very fast and would love to catch some birds.
They also have their kitty condo where they can lie in their beds and look out the window. So, like Cillaliz, I think they've got it good even though they don't go out. (We also have seen coyotes, owls and foxes in our yard; more reasons to keep them in!)