This function is most often used to place a small logo (a watermark) or the photographer's signature in a photo.
To reach this function, use Edit | Place Image [Ctrl+Shift+T] in the Browser or Editor.
In the window, you choose which picture to place, its Position, its Rotation, its Indentation away from its base position, whether or not to Use transparency stored in overlaid image (relevant when placing GIF and PNG pictures) and if desired an overall Transparency. There is also a Use as watermark option via which you can use the placed image as a mask with a shadow; use the Light source control to affect the shadow's direction.
If the picture is too large, then you can use the If needed, shrink overlay to fit option, or Resample it to a certain percentage of its original size.