You host it somewhere (e.g. a Pixelfed instance), take its URL and simply insert that image using the Markdown syntax for images (see the help button in the editor toolbar).
That’s cool. So you can use the same syntax for a link and an image, but it just loads the image when you link an image? That makes things fairly easy!
I wouldn't mind awards coming back, they were a form of monetization on Reddit that I didn't really mind. If we do awards on Lemmy, I think it would be neat if we could pick one free award a day to give out (and let it be any icon), and I don't think awards should give Lemmy premium or any of that stuff, but I'm open to the idea in general.