A novel embedded domain decomposition method (EDDM) is proposed to simulate electromagnetic scattering from structures in an inhomogeneous medium. In this method, the inhomogeneous medium (e.g., layered substrate) is set as the background subdomain, and the integrated structures (e.g., metallic/dielectric components) with properly defined buffer regions (BRs) are set as the embedded subdomains, where the meshes of two can be completely independent and arbitrarily overlapping. The major contribution of this work lies in the following three aspects. First, to allow for arbitrary inclusion of the embedded subdomains in an inhomogeneous background subdomain, an adaptive BR method is developed. The self-coupling equation is rederived to ensure the consistency of the BR and the inhomogeneous background, and a new mutual-coupling equation is introduced to account for the material and/or conductor differences. Second, the boundary element method (BEM) accelerated by the multilevel fast multipole algorithm (MLFMA) is utilized to truncate the finite-element region so that the computation capability can be enhanced and the extra air box setting of the background subdomain in the original EDDM can be avoided. Third, for structure adjustments such as translations and rotations, we further propose an inherited calculation to avoid mesh regeneration and repeated computation of the self-coupling and preconditioning matrices and also reduce the iteration counts and solution time. Numerical examples have shown the accuracy, robustness, and efficiency of the proposed method.