When you're editing, there's a row of tabs below the box where you type. The second one is called Attachments.
If you click it, it will tell you this:
BUT if you drag & drop, it will ONLY appear in the attachments area...If you wish to attach one or more files enter the details below. You may also attach files by dragging and dropping them in the message box.
Maximum filesize per attachment: 256 KiB.
To make it appear in the message rather than just be a linked attachment, you need to click the "Place inline" button next to the attachment and it will then appear, e.g. ...and you can continue on with the message