Question about Inserting pictures

To insert a picture do i have to upload it to a website before i insert it or can i just say the location of it or do i have to do something else.. i see that insert picture icon and i press it and it says to type the location of the image or something so i was like -- im sucha noob to this ..

Do you mean inserting a picture like this:



If so then yes, you have to upload it at another site. I use imageshack.us , it`s free and gives different options such as direct link or thumbnail.

okay thanks for the help !