Richard, the original post picture is of a car without quarter panel or outer wheel house, so I suppose the area in question should be inside the vehicle, inside the now exposed rocker panel, or on the outside or gap of the wheel house. Using the associated text, the term "inside the rocker" was used.
I can say that I also found that on my car, and noted that in my case it appeared that some of the material poured into the inside of the quarter panel leaked through some of the holes, migrated into the rocker, and settled out. But as stated mine was more of a white/light gray seam sealer base, and not a foam product.