In my testing, that doesn't seem to be quite correct. Instead:Alignment. Images you upload are automatically aligned to the left. You cannot change the alignment, nor does text wrap around the image. As such, images will look best if they are about 500px or larger, because they will fill the full frame.
- Images are not aligned to the left, but rather are simply placed inline.
- Images are displayed in their actual size, unless they are larger than 542px, in which case they are reduced to a width of 542px. Images are never made larger than their actual size (even though that is implied by "they will fill the full frame").
Because images are placed inline with the text, it's possible to put small images within the text, such as a "New!" icon or a graphical emoticon, or (if you are giving instructions on using software) a button or other control the user is supposed to click. That's a usage that people are unlikely to even think of, given the misleading instructions in the documentation.
Are others seeing what I'm seeing? As we get closer to the official release, we need to make sure the documentation is as accurate as possible.