When one thing is in another, it is surrounded by or within it, the way chocolate chips are in a bowl of cookie batter.
In is a word with many different uses. A child can be in a sandbox, and a teenager can be in love. You can sit in your car, or say to a friend, "See you in an hour!" An actor might be in a film, while your dad tells people he's in publishing, and both live in New York City. If your clothes are in, they're stylish, and if you're locked in your room, you're confined inside it.