Weird behavior with ansible jinja2 evaluating a variable it shouldn't need and failing

failing.txt.j2

; start
{% if False %}
; not rendered
{{ outer }}
{% endif %}
; end

weird.yml

- name: "test me"
  hosts: localhost
  become: no
  gather_facts: no
  vars:
    outer: "{{ inner }}"
    test_case: "working"
  tasks:
    - name: "duh"
      template:
        src: "{{playbook_dir}}/{{test_case}}.txt.j2"
        dest: "{{playbook_dir}}/{{test_case}}.txt"

working.txt.j2

; start
{% if False %}
; not rendered
{{ inner }}
{% endif %}
; end

Why does test_case working work and but failing does not. In the working test case the template has a reference to inner which does not exist but it does not fail. However in the failing test case, outer is defined, but it has a reference to inner.

Weird.

$ ansible-playbook -c local weird.yml
 [WARNING]: Unable to parse /etc/ansible/hosts as an inventory source

 [WARNING]: No inventory was parsed, only implicit localhost is available

 [WARNING]: provided hosts list is empty, only localhost is available. Note that the implicit localhost does not match 'all'


PLAY [test me] ****************************************************************************************************************************************

TASK [duh] ********************************************************************************************************************************************
ok: [localhost]

PLAY RECAP ********************************************************************************************************************************************
localhost                  : ok=1    changed=0    unreachable=0    failed=0

$ cat working.txt
; start
; end

$ ansible-playbook -c local weird.ymtest_case=failing
 [WARNING]: Unable to parse /etc/ansible/hosts as an inventory source

 [WARNING]: No inventory was parsed, only implicit localhost is available

 [WARNING]: provided hosts list is empty, only localhost is available. Note that the implicit localhost does not match 'all'


PLAY [test me] ****************************************************************************************************************************************

TASK [duh] ********************************************************************************************************************************************
fatal: [localhost]: FAILED! => {"changed": false, "msg": "AnsibleUndefinedVariable: 'inner' is undefined"}
	to retry, use: --limit @/Users/douglethin/Downloads/4328c9f58e8b4f5fc180f487907dfff0-d34fc3db5daef4c3822c6fedc46e64659afd90ea/weird.retry

PLAY RECAP ********************************************************************************************************************************************
localhost                  : ok=0    changed=0    unreachable=0    failed=1