I downloaded the gitbub 16.x release and have it running locally. I enabled posting images. there is a button for images but it is simply a text box asking for source, which did not work when I supplied a locally path. however, the larger question is, is it possible to use a file picker to select images or other attachments? of course I see the same behavior here.
The current implementation requires images to be hosted elsewhere. We could do uploads, but the question is, where to? Cloud storage? Database? What happens if you want to move it? There are a lot of questions to answer.
The forthcoming v19 has image uploading built-in. Track its progress on Github.
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