Earlier quoted context omitted.
中 [inside] is the opposite of 外 [outside]. (Actually, there are several synonymous words which are opposites of 外, but in the 中国 / 外国 contrast, the opposite of 外 is obviously 中.)
My history may be off, but I believe that the Chinese named their country 中國 because they believed themselves the center of the world. Much like how the Romans named the Mediterranean (which means “middle sea”). The primary meaning of 中 is “middle” and it gains the meaning of “inside” by the geometric implication of the insides of something being that thing’s middle. 中國人 is a specific term of nationality. Likewise wi…
Your history is off; the term is very old and does not even originally refer to all of China. It's also the name of a small, non-central part of Japan.
> Interestingly, A LOT of mainlanders don’t know to line up in the 外國人 line when they go through Taiwan’s passport control, and they get upset when they are told to switch.
I think they have a point here; putting mainlanders in the 外國人 line would seem to be an explicit contravention of the One China Policy.