Uploading Pictures into a Post

I uploaded a picture without a problem. Question is: where is the picture stored once it is uploaded? Also, when I uploaded the picture, it gave me the following:

<img src =’/wp-content/CarnivalSmall.jpg’ alt=” />

What does this mean and how do I use this information to get the picture into a post? Keep in mind that I am VERY NEW at WordPress so the more specific you can be the better. Thanks very much!