An outline is a structured list, in which a number of main items are subdivided into a number of smaller items, which can then be subdivided again into even less important items, and so on. The tree structures which you encounter on computers are a kind of outline (for an example, see the tree menu at the left hand side of the screen).
Drawing up this kind of hierarchically structured list, or "outlining", can be useful when you're working on the structure of your essay, as it makes clear what are the key issues to which you're going to need to devote most space - they become the main items on the outline. Less important points, which just modify or illustrate the key issues, go at a more detailed level of the hierarchy, so you know they need less space and can be left to the reader's inferences, or maybe just left out altogether if you're running out of space.
This kind of outline underlies the logical structure of most academic arguments. The introduction sets the argument out in its most general terms, as it relates to the academic field, and the following section deals with a main item, or key issue in more and more detail, drilling down through the hierarchical subdivisions of the outline structure. The next section then jumps back up the hierarchy, moving on to the next main item through giving the reader cues in an introductory paragraph, before gradually moving down the hierarchy of subdivisions once again.
A hierarchical structure of this sort should form part of your design for a reader, since a clear hierarchy of importance makes the reader's journey through your essay much easier. An example of this can be found in news items in newspapers. The first paragraph of a news item states what has happened in general terms, which the following paragraphs go into in more and more detail, so the reader doesn't have to read to the end to understand the key issues. Scenes in films also do something similar, with an establishing shot giving the general context of an interaction, followed by more and more detailed close-ups.
Since you will probably need to revise your outline as you plan your essay, and even as you are in the process of writing it, you may find it useful to create outlines using a computer program specially designed for the purpose.
The following program, which gives you an outlining hierarchy in the form of a tree, plus a separate window to write in, can be downloaded for free:
The following program is not free, but is an extremely effective tool for outlining. A trial version can be downloaded for free: