RE: Howto embed images in marketing emails
Hi Michael,
The way to add an image in marketing email is by selecting Image tile in Design elements.

Then you can add your image to any specific place (only "blue+" place supported)
Be aware of that the native added image is block level element, which means it will be full column element, as those 3 spaces around ALL NEW text element in part1,

either for when you designing a new blank template/emails by yourself.

So why can we add image less than a full column likes spaces in part2? Because they were pre-designed by Dynamics.
You could use system template and replace existed elements with your own.
For current template as example, you can select default logo and click Image gallery icon.

simply choose image you want, don't worry about its original size, the image will be adaptive automatically to fit element box.

If your "embed image" means an image with text likes below,

unfortunately there is no OOB method to achieve this. As you design a modern email template likes system, both of these requirements need HTML editing.
Regards,
Clofly