Every page and post on the site can have an image displayed at the top, below the title. These images are stored in the Media Library and assigned using the built-in 'Featured Image' capability in WordPress (previously known as 'Post Thumbnails').
When creating or editing a page or post you will see a 'Featured Image' box (if you don't see it look in the 'Screen Options' at the top and tick the box to display it). This uses the standard Media Library interface as used whenever you upload images to, or select images from, the Media Library.
Any images over the maximums of 740 pixels wide and/or 555 pixels high (for a page with a sidebar), 960 pixels wide and/or 720 pixels high (for a page without a sidebar), or 520 pixels wide and/or 390 pixels high (two sidebars), will automatically be proportionally resized to fit.
A link can be added to the 'Featured Image' by adding a custom field name 'featured_image_link' and entering the URL as the value (you may need to open up the 'Screen Options' and tick the box to display the custom fields box.