Outside is definitely the best.
CA. is mostly a great place for olives and they tend to be quite hardy as potted plants or bonsai.
Your olive will get away with less water than many other species but that is relative and no us to someone with just one tree.
Basic guideline is to allow the soil to almost dry before watering. Much depends on your local climate and the soil type it is potted in but you need to allow more than just surface soil to dry. Sometimes the top looks dry but down below is still quite wet. Best to scratch down a little to check sub surface moisture before watering. Soaking the pot occasionally is good practice while you learn how to water effectively. Your tree will definitely need more water more often when it is outdoors so you should check more regularly after the shift. As mentioned, so much depends on local climate, soil type, etc but I water my bonsai including olives twice daily in summer and down to weekly in winter if there's no rain. Watering by someone else's calendar is a recipe for disaster. Checking the soil is the only real way to gauge water needs properly.
The surface soil looks like akadama or pumice which are both generally free draining but akadama is a type of clay and does tend to stay wet under the surface so please check more than just the top before deciding to water.
Rainwater is good for bonsai but olives (and most other trees) will be fine with normal tap water. Olives seem to manage even if the tap water is a bit alkaline as it seems to be in many areas of USA.