Classical-mechanical isoenergetic molecular dynamics simulations model Xe atoms and Xe-N clusters trapped in a cage of atomic dimensions, a homogeneous spherical cavity with Morse interaction between its walls and the rare gas atoms. The main interests are the differences in structures and dynamics of rare gas clusters confined and in free space. As the total energy increases, the confined rare gas clusters undergo a distinct phase change from a quasi-two-dimensional fluid to a gas/absorbate exchange fluid. The size of the confined rare gas clusters plays an important role in this transition. The slowest-slide and eigenvector-following methods are used to investigate the saddles of the multidimensional potential surfaces of the clusters.