After you have clicked on Edit Image at the bottom of your post, you will land right inside the designer.
Follow these steps to add a Photo to your layout:
1. Select Elements and then choose Photos
2. Click on any photo you like, from the image library, and it will be added to your layout
3. You can upload your own images as well. Select Add Image and then click on the yellow box
4. Select Change and then choose My Upload. You can upload any image (.jpeg/.jpg/.bmp/.png) up to 2MB in size.
5. Click Done and then select Save.