The books say out-cannel. Must admit all the ones I've seen or used are out-cannel, usually with a shape like a finger-end. I suspect straight across like an out-cannel gouge would work too, and I suspect in-cannel would work, but might not clear the waste as easily.
Mine sharpened quite easily with a fine file. No need to grind, and the only stoning was to remove burrs. Only the tip-end needs sharpening, not the sides - all the cutting is done on the end.
I found they worked well once sharp, and cut quite true to size measured across the 'gouge' shape. They cut when rotated in either direction, which could be useful in a tight spot, I suppose. The only problem is that they wander when starting; you either have to know which way to offset the bit on starting, or make a small start for it with a gouge. On deeper blind holes, they can sometimes leave an uncut core in the middle of the hole, the removal of which isn't always easy. Nose-bits solve that problem.
All in all, clean-cutting, but not as quick or easy as a lip-and-spur drill. Handy for smaller holes than a twist auger can make, and potentially useful for drilling round broken screws to remove them (as illustrated by AndyT on his Small Chest of Drawers WIP in the Projects board). An interesting historical item, but this is one item of hand-tool woodworking that has been superceded by better tools.