Images can be uploaded directly into a Text field in an exercise by clicking on the "Insert/edit image" button.
Next to that, images and files can also be uploaded under the General tab. After the upload, a link will appear that you can use to reference the upload.
Under the earlier mentioned "Insert/edit image" from the editor menu, you can find an image list containing all the images uploaded under "General" from which you can choose your images by filename.
If you only display a small image but you want the student to be able to zoom it, you can set the Dimensions in pixels (or scale with the mouse after inserting the image), and apply the class 'Zoom', also available in the insert/edit image from the editor menu.
For documents, the list with uploaded files can be found using the insert/edit link from the editor menu. Here, you can apply a class to show a download link next to the image. Available classes are document, download document, excel document
More technical information can be found here, under exercise types.