wordpress: managing settings
Image sizes: When you upload an image to a WordPress site, the system automatically creates a thumbnail version of it (for use on index pages and in galleries) and a medium size version for use in story bodies, if the full-size version is too large. This means you don't always need to resize your images in Photoshop before uploading (though it's generally still a good idea). This page let you control the sizes at which WordPress should do its resizing for each of the three versions.
Of course, normal authors want to be able to embed legitimate external media too! To get around this problem, WordPress 3 supports an emerging protocol called oembed. With this system, the post author only needs to paste in the URL of the page that hosts the external media, not the actual embed code itself. When WordPress detects this, it reaches out and grabs the actual code to embed in the post. Therefore, there is no risk of bad things happening, and normal authors can safely embed external images and videos. Be sure to turn this option on - it rocks!
To embed media from external sites with the oembed option enabled, just paste in the URL, NOT the embed code! This lets unprivileged users embed external media, not just admins.
WordPress scans the URL, determines that embeddable code lives at the end-point, fetches it and inserts it automatically.
Uploading Files: By default, all directly uploaded media is added to the
wp-content/uploads folder on the server. Don't change this unless you know what you're doing, and its potential impact on existing images. You should also definitely keep the "Organize into month- and year-based folders" option enabled - if you don't, and you upload a lot of media, you'll end up with a single folder cluttered with thousands of files over time. Trust me - you don't want that :)