There are also text formatting options available from the toolbar. These insert various other tags into your post which determine how it will be formatted when someone reads it. Have a play – you can always click Preview to see how your post will appear, and re-edit as necessary before clicking Submit.
When posting, click the blue Upload Attachment tab below the main text box, select your image file and click Add The File. If accepted, it should appear beneath Posted Attachments. Place the cursor in the text of your post where you want the image to appear, and click Place Inline. (Until you click Preview or Submit, you will see a little bit of gobbledygook containing the image filename rather than than the actual picture.)
Here’s an example:
Images appear as thumbnails which readers can click to view full size.