Updated: 17 June 2021.
Upon upload, if no selection is made to either insert as full or insert as thumbnail, the uploaded image will insert as FULL by default. This is new behaviour, on previous version of the forums, the thumbnail would default.
More re: forum upgrade (June 2021 upgrade).
The image upload process has not actually changed, but the new system generates a thumbnail that looks like the image is already embedded in your post, but it is not.
If on phone, tap the image, if on desktop click the image -- this will reveal the choice to insert as full image or as an attachment. If no selection is made, the uploaded image will default as an attachment.
Full size images in quoted posts will only show as thumbnails (as per previous).