Saw cottage, for example, within Scotland's borders (5)
I believe the answer is:
spied
'saw' is the definition.
(I've seen this before)
'cottage for example within scotland's borders' is the wordplay.
'cottage for example' becomes 'pie' (cottage pie is an example).
'within' is an insertion indicator.
'borders' says to hollow out the word (remove centre letters) (only the edge or border letters remain).
'scotland' with its centre taken out is 'sd'.
'pie' placed into 'sd' is 'SPIED'.
(Other definitions for spied that I've seen before include "Seen" , "Saw" , "Caught sight of" , "Spotted" , "Watched secretly" .)