I'll suppose too the enclosing ellipse scaled as a circle of radius $1$ and the figure rotated so that the (possibly) enclosed ellipse will have a vertical semi-major axis $b$ and an horizontal semi-minor axis $a$. Since an ellipse stretched in any direction remains an ellipse this can be done even if the ellipses axis are not aligned.
I will consider only the case $\;0<a\le b<1\;$ (for $\,b=1$ we need $\,x_0=y_0=0$) and start with an illustration for $\;a=\frac 1{10},\ b=\frac 3{10}$ :

Let's first search the orbit of the center $(x_0,y_0)$ of the enclosed ellipse when remaining tangent to the circle in the first quadrant and obtain the system (with $(x,y)$ the common tangent point and $\,R=1$) :
\begin{align}
\tag{1}1&=\left(\frac{x-x_0}a\right)^2+\left(\frac{y-y_0}b\right)^2\\
\tag{2}R^2&=x^2+y^2\\
\tag{3}0&=2\frac{x-x_0}{a^2}dx+2\frac{y-y_0}{b^2}dy\\
\end{align}
The third one was obtained by differentiation of $(1)$. Differentiation of $(2)$ leaving to $\;\displaystyle \frac {dy}{dx}=-\frac xy\;$ gives us following relation at the tangent point (for $y\neq 0$) :
$$-\frac {dy}{dx}=\frac xy=\frac{x-x_0}{y-y_0}\frac{b^2}{a^2}$$
that I will rewrite as :
$$\tag{4}by\frac{x-x_0}{a}=ax\frac{y-y_0}{b}$$
Its LHS may be substituted in $(1)$ multiplied by $\,b^2y^2\,$ giving :
\begin{align}
b^2y^2 &=\left(ax\frac{y-y_0}{b}\right)^2+b^2y^2\left(\frac{y-y_0}b\right)^2\\
\left(b^2y\right)^2 &=\left(a^2x^2+b^2y^2\right)\left(y-y_0\right)^2\\
\tag{5}|y-y_0|&=\frac{b^2\,|y|}{\sqrt{a^2x^2+b^2y^2}}\\
\text{while from }&\ (4)\ \text{(or by symmetry) :}\\
\tag{6}|x-x_0|&=\frac{a^2\,|x|}{\sqrt{a^2x^2+b^2y^2}}\\
\end{align}
The absolute values are not really necessary and we obtain the parametric answer (for $R=1$ and $\;x=\cos(t),\,y= \sin(t)\;$) :
$$\tag{7}x_0(t)=\cos(t)-\frac{a^2\;\cos(t)}{\sqrt{a^2\cos(t)^2+b^2\sin(t)^2}},\ y_0(t)=\sin(t)-\frac{b^2\;\sin(t)}{\sqrt{a^2\cos(t)^2+b^2\sin(t)^2}}$$
leading to the black curve in the first picture and this one for $\;a=\frac 3{10},\ b=\frac 3{4}$ :

This picture illustrates that in the case $\,a<b^2\,$ the value $\,x_0\,$ has to be restrained (because the enclosed ellipse will get tangent at two points instead of one when reaching $\,y_0=0$ as shown).
Setting $y_0=0$ in the previous solution we find that we must impose (with $\,R=1$) :
$$\tag{8}|x_0|\le \sqrt{\left(\frac {R^2}{b^2}-1\right)\left(b^2-a^2\right)},\quad\text{for}\ a\le b^2\quad$$
We found the external bounds for $(x_0,\ y_0)$ wih $(7)$ and $(8)$ but the initial problem remains :
what conditions are required for the center of an ellipse to remain inside the bounds $(7)$ ?
A mathematical solution is to use Cauchy's integral formula with the (parametric) contour given by $\;z_0:=x_0(t)+i\,y_0(t)$, using $(7)$, to obtain :
$$\tag{9}f(z):=\frac 1{2\pi i}\int_0^{2\pi} \frac{dz_0}{z_0-z}=\frac 1{2\pi}\int_0^{2\pi}\frac {e^{it}\left(1-\large{\frac{a^2b^2}{\sqrt{a^2\cos(t)^2+b^2\sin(t)^2}^3}}\right)}{e^{it}-\large{\frac{a^2\cos(t)+ib^2\sin(t)}{\sqrt{a^2\cos(t)^2+b^2\sin(t)^2}}}-z_0}dt$$
which returns indeed $f(z)=1$ if the center $z$ of the ellipse is inside the black curve in the complex plane and $0$ if outside (supposing that $(8)$ applies for the real part of $z$).
Of course a simplification of this integral would be welcome!
$$-$$
To find if the ellipse is 'inside' it may seem easier to use $(4)$ to find the farthest point of the ellipse $(x,y)$ (the tangent one verifying $\,x^2+y^2=R^2\,$) and see if $R^2>1$.
Let's try this using $\,\displaystyle u:=\frac{x-x_0}a,\ v:=\frac{y-y_0}b\,$ and $\,u^2+v^2=1\,$ from $(1)$ :
\begin{align}
by\frac{x-x_0}{a}&=ax\frac{y-y_0}{b}\\
b\,(y_0+b\,v)u&=a\,(x_0+a\,u)v\\
b\,y_0 u&=((b^2-a^2)u+a\,x_0)v\\
(b\,y_0 u)^2&=((b^2-a^2)u+a\,x_0)^2(1-u^2)\\
0&=\Delta^2 u^4+2ax_0 \Delta\, u^3+((ax_0)^2+(by_0)^2-\Delta^2)u^2-2ax_0\Delta \,u-(a x_0)^2\\
&\quad\text{for }\ \Delta=b^2-a^2
\end{align}
and that's where you obtain a quartic in $u$ with an awful looking explicit solution but you may apply the algorithm (numerically!) directly or find the solution in $(0,1)$ by iterations (say using Newton's method). Once $u$ and then $v=\sqrt{1-u^2}$ obtained you may deduce $x$ and $y$ and conclude with $R^2=x^2+y^2$ (sorry if this conclusion doesn't add much to the other answers, I hope it may help anyway...).