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Why can you not upload a picture onto here directly from your own computer?
Forum format, Some forums will let you, apparently, but most don't; I think it's a server,capacity issue, but I could be wrong on that. No expert, me.
read the instruction...
I'm guessing before a mod comes along that then they would have to host the files/images/videos which takes up loads of space which you pay for and bandwidth that you pay for. Other people also take care of the legal and space side of things.
Flickr/dropbox if you want, I prefer vimeo for vids
http://singletrackmag.com/forum-help/
Dunno why, whether there's a practical reason for it or just inertia. Self-hosting takes a considerable amount more resources in terms of storage space and bandwidth as Mike says, and I suppose there's legal ramifications if anyone posts anything dodgy.
Personally, I think cross-site hotlinking is bad practice, but hey ho.