Inserting images into a blog post is done by using the “Add Media” button on top of the toolbar.
This will open the Media Library for the site.
You can upload images from your computer to add them to the library, or add remote images by copying the URL for the image. If the remote image is moved, or removed, your link will break.
Commercial services such as Flickr can by inserted into a post by using the sharing URL for the image. The image will load at the size allowed by its creator.
Make sure to attribute proper credit to images not owned by you.
A great site for attribution-free images is morguefile.com. Seaching for “Creative Commons” on Flickr will result in millions of results. Pay attention to the type of CC license the author has placed on each image.