Storage is an area where objects are stored. Workers will move the objects from Deliveries. Food and prisoners can't be moved here. This is also the only area where any dismantled or laying objects will be moved to. If no storage area exists then items will be left on the ground instead.
Storage has no requirements and can be defined both indoors and outdoors.
Additionally, if a workman is not currently working, he will return to the storage area until he is required, like janitors usually go to the Cleaning Cupboard.
While the cheap way to start off is simply designating an open area outside for storage. This leaves everything out for prisoners to go through and steal tools and weapons from the boxes. By having an enclosed and protected room, it keeps fewer tools in reach of prisoners and is a safe area for your workers to be locked in during a riot.