A lot of recent questions seem to be synopsis-related, so I figure I'll go over this once and for all so that it can settle the issue until a few months bury it in the archives and someone new comes along and answers the questions because they don't know how to use the "search" function on the blog.
Writers are irrationally scared of the synopsis. How long is it? Does it have to be really good, or is it just a summary? Should it have the character's name in bold? How is it different from an outline? I remember being terrified of the idea. I'd already gone through the manuscript, the editorial phase, then perfected my query letter - and now I had to write more? Holy shit! This just goes on and on and I could screw up at any time! And I went to write a synopsis for a novel that was rejected, though I assume it was because the novel didn't make much sense and not because of the synopsis. This happened again with a different novel a few years later, and when I did eventually get accepted and get an agent, I was thrilled to be done with the synopsis - or so I thought.
After my first book did well, my editor requested a synopsis of the next two books before she bought them. In a panic I asked my agent what to do, to which she said, "Summarize the books. It's not a big deal."
Which it isn't. Really, the synopsis is straightforward. The agent is asking you for a summary of the events that occur in your book, over about 1-2 pages. I say "1-2" because less than one is probably not descriptive enough in my experience and three is generally too long. Some agents do specifically ask for more, and you should give them a more detailed synopsis. If they ask for it chapter-by-chapter, write a paragraph for each chapter.
While the synopsis can be very important when we're trying to determine if the book is going in a solid direction and has a good arc without reading it all, it lacks a certain formality that squashes the query letter. We're also not as serious about formatting like we are in the manuscript itself, where we really, really want you to use the manuscript format described on every single writing website ever. Why? Because manuscript format is specifically designed to be easy on the eyes - spaces between the lines, large font, page numbering - and we need things to be easy on the eyes because we're going to be spending hours reading your manuscript. The synopsis? Not so much. Twenty or thirty seconds, maybe more. Presentation is not so important. Double-spacing, 1.5, single, whatever. Font? It should be readable. Should the characters have their names in bold? Uhm, if you want, sure.
The only important things are to (a) cover the important events in your manuscript, including the ending, and (b) not go on for too long. Seriously, no 80-page synopses. If we can't tell the difference between a chapter-by-chapter synopsis and actual chapters, your attempts have gone horribly awry. (And yes, this happened) So, 1-2 pages, maybe three if it's a long book with a lot of intricacies and you just can't fit it onto two pages. Only do more if it's requested.
As to an outline, it seems to mean a lot of different things to different people, but to me it means "a synopsis with a lot of structure to it." Really I'm not the person to ask about outlines as I never bother to distinguish them from a synopsis. Follow the agent's instructions and you should be OK.
Publishing will provide you with plenty of chances to stress out over real and imagined crises. The synopsis doesn't have to be one of them.