The inner envelope has the title and last names of the Guest(s) receiving the invite and nothing more, no address on this envelope. This also allows the host to specify who is invited and who is NOT invited. It is also ok to write familiar names here like; Nana and PopPop or Uncle James and Aunt Jean. If you are only inviting adults then the inner envelope would look like this:
Mr. and Mrs. Oliver Smith
If you are inviting their children along with the parents, the inner envelope would read:
Mr. and Mrs. Oliver Smith
Jennifer Smith
Brian Smith
The inner envelope is another place for where to write "and Guest". If you are guesting someone with their invite, it's always nice to include the Guests' name if you know it, but if not "Guest" is fine. It is not appropriate to write "and Guest" on the OUTER envelope, which is reserved for addressing purposes, hence the inner envelope.
Last but not least, this allows you another area of your invite to color coordinate with your wedding theme by lining the inner envelope with a color of your choice! You're wedding invite is once in a lifetime... go all out!