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Both hardwood and softwood can be used for both indoor and outdoor applications but some are more resistant to UV and moisture then others. These are ones that should be chosen when being used outside.
These particular species have natural oils and resins that fill cells of wood and provide, in some cases, very good protection against rot and insects. Species like cedar for example last for decades in direct contact with ground while spruce would be rotten in under 5 years.
Of course cedar is a softwood and is used a lot throughout furniture and house construction industry. However, some hardwoods also have very good resistance to rot and insects. Species like teak and mahogany are used a lot in tropics for boat construction, but since cost of these exotic hardwood species is so much in North America we tend to use softwood in outdoor applications.
Another important factor is whether or not you want you intend to use a clear finish or paint to protect your project. Cedar needs to be sealed to prevent oils from leaching through paint. Some species of hardwood like poplar and birch are great for accepting paint but have a tendency to blotch when stain is applied.
Dave Markel is the author of "The All Wood Working Journal". He has helped hundreds of individuals improve their wood working skills. Visit his site at http://all-wood-working-plans.com