Let's say that picture is too big. Let's say we want the user to get a smaller version (a "thumbnail") when he/she looks at the article. Thumbnails always include a frame, so when thumbnailing, you almost always want to specify a caption.
A thumbnail adds a gray border around a picture and lets you add a caption, like 'frame' above. See [[http://en.wikipedia.org/wiki/Wikipedia:Captions Captions]] for caption writing tips.
But 'thumb' also '''automatically resizes''' a large picture into a smaller display size, with an '''option for the user to click''' on the image and see the original large version. Because different people work to different screen resolutions, your preferred size of thumbnails can be set in [[special:preferences]] under "files". The default, which is also used for logged-out users is 180 pixels (px), but you can choose between 120px, 150px, 180px, 200px, 250px, and 300px sizes. If an image is smaller than the thumbnail size you specified then it is displayed at 100% resolution, i.e. its natural width. Generally speaking, thumbnails are the best way to display images.