Pics can be dragged/dropped right into your message. You can also use the "Attach files" button below, or click the "Insert image" button in the edit bar. It's pretty straight forward on a computer.
If you're on a phone, it can take a little trial and error as different phones store your pics in different places and use slightly different interfaces.
Also, we do have a max image size in order to preserve storage space and make the site usable from a variety of data bandwidths. So, if you think you're doing everything above correctly, the image may just be too big. The current file size max is 1MB. The greatest resolution allowed is "HD Quality" which is basically 1920x1080 (enough to completely fill most phone/computer displays).
Finally, for the avatar, you can upload an image through your profile/account page. There are some tools provided to help you center and crop it to 400x400. Or, if you use the Gravatar system (gravatar.com - which lets you use the same image across many internet sites), there's an option for that as well.
Feel free to reach out via the Help Desk or a Conversation if you need more help troubleshooting.