I want to breed my budgies I have a little bird house to go inside the cage but I was wondering does it have to be completely dark in there or can it have see through sides ?

I've never seen a nesting box with clear sides, therefore I would be inclined to think that they are solid except for the entrance for good reason.
Perhaps to keep it cool for the chicks, or to provide privacy for the parents.
Nesting boxes usually always have a top or back that you can open to observe and clean.
Here is a link to some more valuable information.
Exhibition Budgerigars: Selection and Setting up of Breeding Pairs (http://www.avianweb.com/budgiebreeding.html)

I had lovebirds - their nesting box had blinds on the top. I could see in and light could go into the box. I would "guess" it's the same with parakeets. For that matter they'll lay and hatch their eggs on the floor of the cage, in open view.

Here's another very good site - Breeding Budgies / Parakeets (http://www.budgieplace.com/breeding.html)