Hmm, I'm having trouble visualizing it then.
I don't blame you. I went back and read it and *I* couldn't understand what I meant :-) So let's try again.
Tunnel down one layer and dig a room. That room is underground, so it is inside. Now channel around the outside of the room, leaving the roof and walls intact. The room is *still* inside because nothing has changed. We just channelled away on the outside to make a relief of a building so that it appears as if it above ground, even though it is below ground. I'm nearly 100% sure this will work because the contents of the room have never been exposed to the outside. However the walls and roof are made of soil, which lacks some authenticity.
Now start again. Dig the same room, but this time build walls around the room. The walls are still inside. Now channel out around the room again, exposing the walls (but not the inside of the room). Now we have a room with a soil roof and built walls. Is the inside of the room inside or outside? I'm relatively sure that it is inside because the inside of the room has never been exposed to the outside, and I *think* the determination of what is inside/outside is done with a projection from top down (otherwise having a door would make your fortress outside).
Now start again. Dig the same room. Then build a floor. Then dig a room under the first room. In the lower room, build walls. Then channel away the soil over the top room (being careful not to cave it in!) and then channel around the walls. The result will be a building with a built ceiling and built walls. I *suspect* that the interior of this building (the lower room) will be indoors. That's because the contents were never exposed to the outdoors. I *suspect* that the code does not distinguish between building material, but rather sets a flag whenever a tile is exposed to the outdoors. In this case the roof (the floor of the upper room, which is now gone) is outside, but that won't translate into the lower room. Basically, I'm guessing how Toady implemented it. It would be easy to check, but I haven't gotten around to it.
As to why to do it? This will allow you to have a tavern which is "indoors" while being thematically "outdoors". This will allow the dwarfs to clean (blood, vomit, whatever). As long as you have 2 layers of soil, the areas you channelled away will regrow with trees and bushes and stuff, so you will never know that it wasn't just an outdoor structure built in a depression.
Edit: I tried it, and it does, indeed, work. I planted pigtails no problem in my house. Channelling is a gigantic PITA, though... Very likely an easier way is to leave the soil on top and then build a floor, rather than doing the double layer. I suspect it will work fine.