This is important, because the column in your blog is only so big; in the case of this template, it's about 500 pixels wide. If you try to post a pic that's larger than that, it goes off to the side, slows down the whole blog something awful, and causes warts to grow inside your ears.
So don't do that.
If you have a picture you just cannot live without, and it just so happens said picture is wider than the posting space of your blog (which varies with the template you're using, so experiment) you can edit it down. Let's look at an example.
I like this picture, but it's too big, being, so Photobucket informs me, 600×450. This is what happens when I try to post it here unedited:
Gah! Not only does it make me hit "Right Arrow, Return, Return, Return, Return, Return, Return, Return" to get past the damn thing so I can continue to post, but it overspills the blog. What to do, what to do?
I look at the blog and go "this will never do" and then I hit the Edit tag, just under the title. You can only see it if you're signed in to WordPress. This takes me to Edit View, which is just like the view I used to post. You can edit text or anything here, including pictures. So that's just what we'll do. Now that we're in the Editing View, we click on the picture; you'll see that the Image button (the little tree) selects itself, so click on it. Now you get the box you used to post the thing originally. We know it's 600 wide and needs to be 500 or less wide, so let's just go in there and change the 600 to, say, 400. Then we hit Update and it looks like this:
Hmmmm, something's not right…yes, unfortunately it doesn't automatically retain aspect ratios, so you're going to have to figure this out on your own. Subtracting 200 from the width and 200 from the height doesn't quite do it, so guesstimate unless you're good with math. Since 200 is a third of 600, I'll take a third off the height as well and that should make it more or less right. Let's try it, so it'll be 400 by (450×2/3)=400 by 300. That looks like:
Yeah, baby! That's how it's done. Note that there's some pixillation when you do that. Ah, the world is full of compromises!