Find the folder where the image is located (often a folder called Images) on your Plone site and select the image you want to use from the list. You can also use the search field to find your image by name. Once you click on it, you'll see a preview of the image appear on the right side of the window.

You can "float" images to the left or right by choosing the Left or Right buttons.  Inline images will simply be inserted into the middle of the text, which will break above and below the image.

ALT-text is the text that will be shown to users whose web browsers can't display images, or used for vision-impared web browers.  In most browsers, the ALT-text will also appear when a person hovers the mouse over the image.  By default, Plone will use the image's Title as the ALT-text or you can put some sort of brief descriptive text here.