At the moment you still need to host your picture somwhere else, but that might change soon.
To show an image directly in your post rather than a link though, you need to surround the URL of the image with IMG tags like this:
If you cant be bothered to type the tags in yourself, there is a button when you post to put the IMG tag in for you. You click it once, then type or past in the URL of your picture then click it again to put the closing tag in.