In the reply box there's an "insert image" icon which will add image tags around a url, or just do it yourself like Dave mentioned. You do that if the image is already available online somewhere.
If you click on "go advanced" there's also an attachments button you can click to find an image on your computer and upload it. You can also upload from a url there, but I think it's still broken.
If you're trying to upload from an iOS device I think you're out of luck, but android works fine.