Live out in...What does it mean?

"In the rice fields" means in a place surrounded by rice fields.

The use of "out" indicates that we're discussing a place away from where the speaker is. It may also suggest that the location is outside of any town or city.

"To live" in this context means to make one's home in a specified place.

lived out in the rice field ............ lived // out / in the rice field

This usage must not be confused with the (transitive, with cognate / hyponymic objects such as 'his life', 'a childhood fantasy', 'a nightmare') multi-word verb 'live out' (compare 'act out' in a comparable sense), where the particle 'out' is completive:

His life was lived out [ie He lived out his life] in scenes typical of the early Western frontier. [Emerson Hough_The History of the Old American West]

At the risk of sounding like a Californian, I'm referring to the political pattern that was acted out [enacted / adopted and faithfully adhered to] in the recent Brown-Reagan contest in that state .... [International Socialist Review]

Ambiguity is possible: His life was lived out in the wilds of Canada. (Simplex verb or MWV?)

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The verb is largely irrelevant (though not too many fit sensibly).

And the prepositional phrase following 'out', though it will usually be an in-phrase, is immaterial.

[We spent a] [m]orning exploring out in the desert!] [facebook]

Another Finnish folk tale states that if wandering out in the forest, a person should keep a good eye out for [the] eerie glow of a will-o-the wisp which if spotted ... [Traveling4family.com]

Bye, bye-bye, baby, bye-bye. I guess you know you're on your own,

It seems you just got lost somewhere out in the world. [a fearful place!]

[Bye, Bye Baby Big Brother & the Holding Company, Janis Joplin_Lyrics.com]*

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An example where the prepositional phrase uses a different preposition:

I imagine how horse herders lived out on the Steppes, dealing with bad weather and all of the disadvantages and advantages of that environment. [Sandra Olsen_AMNH]

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'He's out in the wilds / the jungle / deepest Africa [only idiomatic when, of course, Africa was largely unexplored by 'Civilisation' and was [considered] full of wild animals, wilder rivers, even wilder mosquitos ...]' invokes the 'out of the realm of the usual warm, comfy, civilised living' metaphor. As exemplified in 'the spy who came in from the cold'.

Here, as The Photon says, the metaphorical image may be rather less dramatically invoked, but 'out' is not the most comfortable, homely, familiar place to be.