There are two ways to add your own photos or pictures (.jpg or .png files).
When you're editing the book:
1) You can drag the photo from your computer to one of your pages. The photo will be automatically converted to a prop (smaller than a page).
2) You can also click Photos on the left, click Upload your photos, and pick your photo. You'll be asked if you want use the photo as a prop (smaller than a page) or scene (covers the entire page) and then you can crop it. The photo will then be added to the current page you're editing.