Uploading Lesson Images?

I didn't see this in a search so I'll ask. When using the editor to create lesson content in a course - the upload option shows that an image file can be uploaded - but there is no "upload file" option avaialble.

I've tried this with both native and s3 storage enabled. Am I missing something? Just dragging an image into the add image box displayed only a placeholder and 'insert from URL' is the other option.

Where is the upload from file image button?