Inner classes are classes defined inside a class or even inside a method.

An inner class defined in a method can only access local variables of the method that are declared final.

An inner class defined inside a class can access the members of the containing class.

If a class has a member which needs a controller, it is convenient to create the controller as an inner class so that the controller methods will have easy access to the member.

A controller class doesn't have to be an inner class, but it would need to have access to the object it will control.

For example, the RectangleComponentFrame could add a controller for its RectangleComponent member by passing the component to the controller's constructor:

    // Create a mouse listener for this component
    MouseListener listener = new MousePressedListener(component);
    component.addMouseListener(listener);

where MousePressedListener is an ordinary class (not an innner class) that implements the MouseListener interface:

public class MousePressedListener extends MouseAdapter
{
  RectangleComponent component;

  public MousePressedListener(RectangleComponent component)
  {
    this.component = component;
  }

  public void mousePressed(MouseEvent event)
  {  
    int x = event.getX();
    int y = event.getY();
    component.moveTo(x, y);
  }
}