Yann has the right idea but i'm not sure how to do that if the square in the example is an irregular shape? Basically the square needs to only have an outline of the square i.e. walls and the circle can only move inside those walls.
I'm thinking I may be better off making each "wall" a sprite in itself and having collision detection on it that way. I thought there might have been an easy way to have a single sprite with a hollow center but I may be over thinking it.
Thanks for the responses anyway! Its nice to see such a helpful forum!
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Also Yann, those Reddit Videos are awesome!