By "hosting" we mean putting it on a web server so the rest of the intarweb can see the image. We can't see stuff that's directly on your computer, so you have to upload it before you can show it off to your e-homies. Sites like <a href="http://www.photobucket.com">Photobucket</a> are made to solve this dilemma for you. You can upload your picture to Photobucket's servers, and then display it in a post here using IMG tags.

The board's Attachment function works in a similar fashion by uploading the picture(s) to the EoFF server, and then makes it easier by automatically displaying the image in your post.