Patient-friendly definition from the DentistsDirectory.org dental glossary.
Inlays and onlays are custom-made restorations that occupy the middle ground between fillings and full crowns. They are used when a tooth has decay or damage that is too extensive to be reliably restored with a direct filling, but where enough healthy tooth structure remains that a full crown — which covers the entire tooth — would remove more healthy tooth than necessary. Fabricated outside the mouth (typically in a dental laboratory or with in-office CAD/CAM technology) and bonded in place, they are sometimes called "indirect restorations."
The distinction lies in where the restoration extends. An inlay fits entirely within the cusps (the raised points) of a back tooth — it fills the valley between the cusps without covering them. An onlay extends over one or more cusps. A full onlay covering all cusps is sometimes called an "overlay" and approaches the coverage of a crown, though it still conserves the outer walls of the tooth rather than removing them. The choice between filling, inlay, onlay, and crown is based on how much tooth structure remains and its structural integrity.
Inlays and onlays are made from porcelain (most aesthetically pleasing), composite resin (more repairable but less durable), or gold (the most durable option, particularly for patients who grind). Porcelain and zirconia options are tooth-coloured and nearly invisible. Because they are fabricated with precise fit and bonded with strong adhesive cements, inlays and onlays are typically more durable than large direct composite fillings in heavily loaded back teeth. They can last 15–30 years with good care.