Users can upload images (in any web-recognizable format, i.e. gif, jpg, png) from their computer into the LibGuides boxes via the Rich Text Editor, and the images will be stored on LibGuides servers.
I really love using Libguides, but the lack of integrated image uploading has been the one inconvenient feature for most of the librarians I've worked with. At my previous library we had to find awkward workarounds like creating unpublished web pages containing their images since there wasn't easy ftp access to the web server for most people. This is going to be a welcome addition to an excellent product.