You can use either expression for clothes, but the meaning is different.
'Inside out' is just what it sounds like. The side which should be inside is outside. As in your example, if you are washing something that might get damaged in the washing machine, you turn it 'inside out' before it goes into the laundry.
But let's say you get dressed too quickly and you put your sweater on 'back to front', with the front part at the back and the back part at the front. Suddenly, you catch sight of yourself in the mirror, and see that your sweater is 'the wrong way round'. So you quickly put it 'the other way round', with the front part at the front.
It's now 'the right way round'.
The other phrase to remember as part of this set is 'upside down'. If you're hanging from a tree by your feet, you're 'upside down'. Nice phrases, aren't they?