We’ve improved the way the Outline style shapes are displayed in 2D and 3D to make it easier to understand what cutting On Path, Inside and Outside will look like. Previously, changing these settings did not update the 2D display, and as a result showed red areas in the 3D preview.
To fix this problem we made the 2D shape display the actual area being cut, as well as a thin line showing the path for the shape itself for reference. It is a bit hard to explain in words – just watch this gif:
The gray is the actual area that will be cut (true to the bit size you have selected). You can see it shift inside, outside or right in the middle of the actual reference path. Additionally, this fixes any red areas that show up when using offset outlines.