When you click on "upload a file", you will be able to browse your computer for the image to upload. When you find the image in a directory, double click on the filename, and the forum software takes it from there. Once the file is uploaded, you will see a small version of the image in your text box where you were typing. You will have your choice to publish the picture as a "thumbnail" (which is a small version within your post), or "full screen", which prints the image all the way across the page here on the forum. From what I understand, thumbnails make it easier for the folks reading the forum on phones, kindles, tablets, etc.
One final note: if you upload more than one picture, the software will also give you the choice to choose "thumbnail" or "full size" for ALL of the pictures. That feature saves you a few keystrokes. Hope this helps.