Selout is essentially the opposite of AAing, it's the placing of dark pixels along the edges of the object, presumably so that either the sprites when put in a game context would either blend in better or stand out more from the background. Depending on the background color I guess.
The following images were shamelessly lifted from pkmays' incredibly old tutorial:
outlined - selectively outlined
game context
Anyway the general consensus is that a consistent outline with color variation to simulate line weight looks nicer and I tend to agree. With those you don't have to worry about how your sprite interacts with changing background colors, and don't have to limit the background brightness to make sure it acts as AA at all times.
You've made some good strides with this, the outlining is handled much better than it was before (however the hammer handle is still a mess!). (His) right arm bends very strangely, the elbow should be a bit higher than where it's at now I think. I like what you did with the chest.