Display/paste image in a topic

How can I add an image in a post ?
When I click on the image icon it just shows -

Hi vinod.karuvat,
Insert the URL of the image you trying to attach between

Also note that if you hover your mouse over the quote icon in the upper right of an existing post, that other icons will show up and that the paper clip icon is for attaching files (not necessarily directly displaying as an image, but the image would be available).

You can upload an image to imgur, for example, and when you do, imgur provides a handy ‘bbcode’ link you can paste straight into a post. As others mention, it just puts an image url in betwen the ‘img’ tags.