(This also works for pages. The same mechanics hold for both blog posts and pages. The only difference is that blog posts are displayed on the “front page”, whereas pages, at least in this layout, are listed off to the side and at the top.)
This assumes you are using the Visual editor. If you are using the HTML editor, then you probably don’t need this how-to guide. If you don’t know what I’m talking about in this paragraph, don’t worry about it.
Make sure the cursor is in the location where you want the image to go. That done, click on the appropriate icon below the space for the post title. (You may first want to click the Save Draft button in the Publish rectangle to the right, especially if you’re on a slow Internet connection or an old computer.)
It may take a little to load, but a dialog will appear, hovering over your unfinished post. If you decide you don’t want an image at the moment after all, there should be an X in the right corner of a gray bar at the top of the dialog that will cancel the image addition process. Otherwise, click the Select File button.
You will be presented with a standard “Open File” sort of dialog box. Use it in a standard sort of way. When the uploading of the image(s) is finished, you will be given various choices. Don’t worry about them, just scroll to the bottom and click the Insert Into Post button. The image should appear in the visual editor. The image will probably look smaller than it should. This should not be a problem: if people want to view the image at actual size, they can click on it.
That’s really all you need to know about inserting images into posts. Inserting images into pages works the same way.