The Insert > Picture operation has an Insert dropdown with three options:
- Insert
- Link to File
- Insert and Link
The first one appears to insert the actual file, although at a huge reduction in file size. I have a 8,215 KB JPG image file. If I paste it directly into Word, it increases the size of the Word doc by about 8KB. If I insert it using option #1, Word doc only increases by about 660 KB, less that 10% as much. When printed, the two look about the same to me.
If I use option #2, the Word doc increases by about 20KB. In addition, if I replace the external image file, the Word document will show the new version without me having to do anything.
If I use option #3, the doc size increases by the same amount as if I used option #1, but if I replace the external image file, it works like option #2.
So what is option #3 really doing? I thought it might be #1 plus a link so that if I send the Word doc without the external image file, it will still have the image in the doc. But if I delete the external image file, both #2 and #3 no longer show the image.