Trilium supports storing and displaying images. Supported formats are JPEG, PNG and GIF.
An image can be uploaded in the form of note's attachment or as a standalone note placed into the note tree. Its reference can be copied into a text note, in order to display it in the text itself.
Uploading images
To add an image to the note, simply drag it from file explorer onto the note editor inside Trilium and the image will be uploaded.
Alternatively you can click on block toolbar and then on "Insert image":
You can also copy and paste an image from web - the image will be (asynchronously) downloaded and embedded.
Compression
Since Trilium isn't really meant to be primary storage for image data, it attempts to compress and resize (with pretty aggressive settings) uploaded images before storing them to the database. You may then notice some quality degradation. Basic quality settings is available in Options -> Other.
If you want to save images in their original resolution, it is recommended to save them as attachment to note (top-right "Note actions -> Import files").