yes. choosing which visa office the application goes to is for outland appliants, as inland applicant's don't have a choice. sometimes a person is a citizen of 1 country, and chooses the application to be processed in a country they currently are residents in provided, they are legally admitted there for 12+ months. essentially, they are taking away the applicant's right to make that choice, and now allowing it to be solely in CIC's hands. that has nothing to do with inland vs. outland.
there are different packages for each type of application, so the type of paperwork submitted will let CIC know which application stream is being submitted. CIC does not automatically decide to process all applicants currently residing in canada as inland.