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wordpress knowledge base - The MEDIA SETTINGS sub-panel is the place you define choices for displaying various media, mainly images, that are offered from your MEDIA PANEL inside the upper NAVIGATION bar.

WordPress has built-in image reduction. It automatically creates up to three images of numerous sizes, (thumbnail, medium and huge) in accordance with the dimensions within this sub-panel and WordPress also saves the original image, so you will have a total of four image sizes saved for every image you upload.