Newer versions use UltraPeers (protocol v0.,6) instead of the classic gnutella model (v0.4). With UltraPeers, you are connected to many more hosts at one time while not wasting any bandwidth. Only relevent searches are sent to you, and since the traffic is greatly reduced, the search horizon broadens drastically.

Incoming or Outgoing simply refers to the idea of "who initiated the connection." If you initiated it, it's called Outgoing, and if someone else initiated it, it's called incoming.

You can still increase the number of UltraPeers you connect to in the New UltraPeer versions of LimeWire (2.x and later).

Best,