Yes, in order to get the pics full size, and actually display in the post instead of as attachments, they have to be linked to from an external site.
For example, if I want to display a photo stored over at BFP (BassFishingPhotos.com), I would either find the image there or upload it there and then grab the BB code for the medium sized image. It would look like this:
[url=http://bassfishingphotos.com/image/hVyF][img]http://bassfishingphotos.com/images/2016/12/12/0711142053-Edited.md.jpg[/img][/url]
And then I could just paste it into my message exactly as it is there and it will display my pic in the post, instead of as an attachment.
Like this:
Let me know if that makes sense to you.