Unfortunately, you can't analyze this logically. There are hundreds of expressions and situations that require "in" and hundreds that require "on." You need to notice them when you read and listen and then memorize them. You also must remember other words such as "at." Here are a few of the most common or useful examples for place and location. You can google for more of them. Search for "prepositions of location in on at." Then you can search for "prepositions of time in on at" and learn about those as well. ON Earth, Mars, the Moon IN North America, Asia, Europe IN Argentina, Brazil, the US IN Buenos Aires, New York, Moscow ON Main Street, Fifth Avenue, High Street (Note: In UK English they use IN + street, not on) IN school, IN bed, IN the hospital (= you are sick; UK English is "in hospital," no the) AT home, AT work, AT a restaurant, AT the mall/cinema, AT the hospital (= you work there or you're visiting a friend who is sick) ON the beach, ON an island ON a plane, a train, a boat, a bus, a bicycle, a motorcycle, a horse IN a car, a taxi Hope that helps!

In the most literal sense, on has to do with contact between surfaces, in has to do with enclosure and containment. The water is in the glass. The car is in the garage. The students are in the gym. The chocolates are in the box. The milk is in the refrigerator. The pen is on the book. The book is on the table. The man is on the roof The newspaper is on the floor.

When should I use each one? I recommend reading the examples and explanations of wordreference.com. You can just search for the explanations to your doubts... "Put the book IN the car" (inside of) "He put the book ON the hood of the car" (on top of) Word reference. :) http://forum.wordreference.com/showthread.php?t=182059