As with instance methods and variables, an inner class is associated with an instance of its enclosing class and has direct access to that object’s methods and fields. Also, because an inner class is associated with an instance, it cannot define any static members itself.
Objects that are instances of an inner class exist within an instance of the outer class. Consider the following classes:

class OuterClass {
    ...
    class InnerClass {
        ...
    }
}

An instance of InnerClass can exist only within an instance of OuterClass and has direct access to the methods and fields of its enclosing instance. The next figure illustrates this idea.

An Instance of InnerClass Exists Within an Instance of OuterClass
To instantiate an inner class, you must first instantiate the outer class. Then, create the inner object within the outer object with this syntax:
OuterClass.InnerClass innerObject = outerObject.new InnerClass();
Additionally, there are two special kinds of inner classes: local classes and anonymous classes (also called anonymous inner classes). Both of these will be discussed briefly in the next section.
*Note: If you want more information on the taxonomy of the different kinds of classes in the Java programming language (which can be tricky to describe concisely, clearly, and correctly), you might want to read Joseph Darcy’s blog: Nested, Inner, Member and Top-Level Classes.