Q:

Difference between floyd rose mounted on the body or inside it

Could you explain what is the difference between a floyd rose mounted inside the body (the left, orange one) and on the body (the right, white one)?
Is the action lower/higher, how does it influence playing, which one is better? I see the ones hidden inside the body more often.
It's a dinky and an Adrian Smith signature Jacksons.

A:

There are not really any differences between recessed and non-recessed Floyd Rose tremolos. Most of my non-recessed ones can pull up by quite a few semitones. There is one that can't, because it is set to lie along the body - so it is only suitable for divebombs, but the others either have cutouts behind the trem, or have the hinge point above the surface of the guitar.
The height of the trem doesn't necessarily have anything to do with the action either, as this should be set up correctly no matter where the mount points are. You may have a high action between the strings and the body with a high mount trem, but that really doesn't matter.
There is no way to say one is better than the other - everyone is different, so you need to decide what you prefer. 

A:

The Floyd Rose mounted inside the body is called a recessed FR. A recessed FR allows you to pull up and sharpen the pitch, while a non-recessed FR can only do dives. A recessed FR can be converted to act like a non-recessed one with something like a Tremolo-no, and converted back by removing it.
Action-wise they are both adjustable. The recessed FR has a problem if you put too much strength on your hand when doing palm mute, which will sharpen the notes.
EDIT: some non-recessed FRs can do limited pull-ups too. It varies to different designs of the whole system - neck angle, additional routing etc., leaving how much space for the pull-ups to work. Then again, it is always very limited, while a recessed FR can have much more freedom.

