The workspace monitor shows the video that is the result of the current timeline. It works in a similar way to the clip monitor.
Inpoints and outpoints on the workspace monitor achieve the same purpose as they do on the clip monitor. You can choose a part of the current timeline, and drag a clip of it back to the timeline. You will get a "project clip", which is a clip that contains all of the clips on the timeline in the state when you made it. It is useful for grouping together a number of clips when you have finished editing them and want to be able to treat them as a single clip.