The umbilical cord naturally dies and falls off of a newborn baby relatively shortly after birth, within a few weeks. Similar to old dead skin flaking off your body.
So, what happens after birth but before it dies and falls away?
Generally it gets cut/snipped a couple inches away from the baby by the medical staff, then this extra umbilical cord still hanging on the baby is just wrapped around soemthing/tied in a knot to keep it from flopping around and getting in the way until it falls off.
For what decides if you have an innie or an outtie, this actually isn’t decided by anyone and has nothing to do with how the umbilical cord is handled, instead it is just a random chance that fluid builds up in the belly button, kind of like a ballon, creating an outtie
They put a peg around an inch away from the belly and another peg about two inches away. Then cut between the two pegs. Then the leftover umbilical cord (with the first peg on) falls off maybe a week later, leaving a bellybutton. How it forms as an innie or outie is entirely random (so I believe).
You have to clean it regularly to prevent infection.
Source: have cut two umbilical cords and cleaned around the belly buttons until the umbilical part falls off.
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