The app isn't in control of that. The instance you're on is. I've only heard of one instance that allows direct uploading of video and gifs, and IIRC, it was Kbin. For others, you can only upload images; videos and such need to be linked.
To be clear, Kbin is not an "instance". In fact, Kbin is not Lemmy. It's a completely different thing than Lemmy. It's like a mix of Lemmy and Mastodon. The image-only upload is a Lemmy limitation (not changeable by instances).
Lemmy only supports images. You cannot upload video files to your instance. My workaround is to upload videos to YouTube or catbox.moe and then post the URL.
Lemmy instances are hosted on personal servers. They don't have the massive storage space and bandwidth that a billion dollar corporation has. If you want an instance that hosts videos, then make your own. You'll have to buy a lot of storage, and pay for a lot of bandwidth, though, because videos take up a lot of both of those things.
The Liftoff developers can integrate APIs from video-hosting websites like catbox.moe and YouTube into their app. By doing so, we would be able to upload videos directly through the app without having to leave it. It would then automatically post the video URL on our behalf.
If you like the idea, feel free to make this suggestions to the devs.