My wood burning furnace is the indoor type. It is basically a woodstove with a thermostat, a big blower connected to the duct work and a small fan in the front that is controlled by the thermostat to stoke the fire up when you want the house warmer. It can also burn coal.
Now we have ours set so that the small front fan is constantly on (by turning the thermostat all the way up). You really don't want to run a woodstove on a thermostat (allowing it to turn off and on) because you will not get complete combustion and therefore have more creosote to deal with, which is not worth it. We adjust the small fan by opening and closing the damper on it partially and based on the wood we are currently burning and how quickly it will burn.
It has a regular chimney like any other woodstove or fireplace. For all intents and purposes, it is just a wood stove with a blower that puts out to the duct work.
The downside to having a woodburning furnace like mine is that if the power goes off, you better have a generator. We have had to shut down the fire before so that it wouldn't overheat the ductwork when the power had gone off for a couple hours. This could also fry the thermostat controls and electric wiring or make it unsafe. We have got to get a generator for this reason. When we hear the weather is going to be bad, we just build smaller fires as a precaution, so they will be easier to put out. Definitely a problem--now I'm worrying about it again. Ha.
Our house is two-story so this set up does do an awesome job of getting the heat pumped to the upstairs. Our upstairs does not feasibly have a good space to have an additional woodstove because of its layout.
If I had a one-story house, I would much rather just have a plain 'ol freestanding woodstove or coal burner/combo and have one on either end of the house. This is the setup we had when we lived with my inlaws. It was ideal because we comfortably camped out during an 8-day icestorm back in 2003 while everybody else was freezing their fannies off. Our freestanding woodstoves did not require electricity to run a blower for distributing the heat. Overheating that stove was not an issue like it is with my wood furnace and ductwork.
The outdoor wood furnaces would not have the issue of overheating at least. But you would be without heat in the event of a power outage unless you did have a generator. There is also the cost of electricity to factor in, as you will need it to pump heat to the house.