There are several tutorials on this site that show you how to upload attachments. This is the pictorial version:
While creating your post click the "Manage Attachments" button:
Click the "Choose file" ("Browse" on some systems) buttons to select your photos (or other files) from your system. (The "Attachment Key" will give the largest image size permitted.) Then, click Upload, and close the window when finished.
If you want to have photos appear in your post, click the new links to each attachment that now appear above "Manage Attachments". Copy the URL, and past it between the IMG tags, like any other photo. You can use the same format in any other posts where you want to display the same image without having to upload the image again.
(Note: You can only upload 3 attachments per post.)