> I do not understand what the 'link to an URL means
URL is an acronym of Uniform Resource Locator which is technical way of saying "where is the external file you want stored", and they are used to tell a web-browser where to load a resource (like a HTML file, a media file, etc..) from. A URL has two basic formats:
a. Fully Referenced.
This format includes is generally used to reference resources (files) that are stored remotely, the URL (in your location bar) being used to access this question is one of them. They are generally made up of three main parts:
i. The protocal to use to access the resource: for this question its http
ii. The domain name of the web-site: for this question its twinery.org
iii. The file-path of the resource: for this question its
/questions/39875/i-am-using-harlowe-2-1-0-and-i-cannot-seem-to-add-an-image
b. Relative
This format is used to describe a resouce that is being stored relative to the HTML file that referenced it.
/*
Ex 1. Remotely hosted files.
If your story HTML file is stored at
http://some-domain.com/my-story.html
... and it needs to show an image stored at
http://some-domain.com/images/forest.png
... then the relative URL used to reference the image from the HTML file would be
*/
<img src="images/forest.png">
/*
Ex 2. Locally stored files. (on your machine)
If your story HTML file is stored at
C:\my-projects\adventure\my-story.html
... and it needs to show an image stored at
C:\my-projects\adventure\images\forest.png
... then the relative URL used to reference the image from the HTML file would be
*/
<img src="images/forest.png">
Twine Background.
It sounds like you were previously using the Twine 1.x application, this application included support for adding the contents of image files (as base64 data inside a special type of Passage) to the story project, and such content was then embedded within the story HTML.you generated via the application's build option.
The developers of the Twine 2.x application, which isn't a later version of Twine 1.x, decided (for technical reasons) not to include this Image Embedding feature when they first created this new application. Three of the reasons were:
1. The web-browser based release of the Twine 2.x application, which was the first release to be created, uses your web-browser's Local Storage cache to store the contents (Passages) of each of your story projects. Commonly used web-browsers set the default maximum size of this cache to 5-10 MBs per domain, which is quite small and would be quickly filled if the data of embedded images were added to it.
2. When a story HTML file is viewed within a web-browser all the contents of that file needs to be loaded into memory before the first Passage can be shown to the Reader, and if the HTML file's content also contain 10's -> 100's of MBs of embedded image data then all of that data also needs to be loaded into memory before the first Passage can be seen.
3. Web-browsers include a built-in caching system for retrieving & locally storing externally stored resources like media files. The media related sub-systems of modern web-browsers have been designed to unload out of memory any media data that isn't currently being referenced, which frees up that memory for other usages.