Hi - good question!
I believe the max file size for images is actually around ~18 to 20mb but the forum software looks at image dimensions. If the image dimensions, either height or width, are greater than 1200px it gets resized down to 1200px. It keeps the aspect ratio. We would quickly run out of space if the software didn't do this.
The file type shouldn't matter. JPEG, GIF, PNG, etc all work fine.
One of the main issues that slows down the forum is when full size images are used in posts. Or if they manually specify the width on the attach bbcode for the image. By default the forum should be including thumbnails in posts once you click attach because I removed the "attach full" from the editor. Some members are still using full size attachments though and that slows down the forum. The best thing to do when attaching pics to a post is to use that insert "Thumbnail" button to attach the pic as a thumbnail into the post. See below:
View attachment 751259
The big, huge, large, enormous, gigantic advantage to attaching images as "thumbnails" is that the thumbnail image is much smaller in file size and is hosted on one of the fishlore CDN servers
near you, so it makes the loading of images much, much quicker. Members can still click on the thumbnail to view the full size image when/if they want. The other consideration is that most visitors (like 90%) are on mobile devices nowadays, so full size images are totally unnecessary.