at the risk of sounding like a total noob i understand that its the same thing.
it does attach the pic but for aesthetic purposes it will show in the email body. the receiver should be able to save the pic to his HD just as if it were attached. try sending one to yourself.
Troneas is absolutely correct. Within the message sent from sender to recipient, there is no difference between attachments and insertions. Most email clients can display inline any file format that they "understand."