Joomla comes with Media Manager.  It is accessed by selecting Content on the top menu bar and selection Media Manager from the dropdown menu or select it from the Quick Icons on the Dashboard.

The screen will show you all of the folders that exist inside of your Images folder that resides directly on the root of your site.  From within Media Manager, you can create a new folder, delete folders, open up folders, upload media into the folders.  Media means anything such as images, videos or documents.  The file extensions allowed are set within the Global Configuration under the System Menu. You must select Media Manager from the list on the left side.

The allowed file extensions are by default are: bmp,csv,doc,gif,ico,jpg,jpeg,odg,odp,ods,odt,pdf,png,ppt,swf,txt,xcf,xls,BMP,CSV,DOC,GIF,ICO,JPG,JPEG,ODG,ODP,ODS,ODT,PDF,PNG,PPT,SWF,TXT,XCF,XLS

The allowed MIME types are: image/jpeg,image/gif,image/png,image/bmp,application/x-shockwave-flash,application/msword,application/excel,application/pdf,application/powerpoint,text/plain,application/x-zip

Joomla also sets an allowed maximum file size of 10MB.

If you create a folder in Media Manager, Joomla will automatically created a generic index.html file in that folder.  You won't see it listed in Media Manager, but Joomla places it there so that someone can't get a directory listing by typing the folder URL in a web browser address bar.  This is for security reasons.

If you don't like the big folder icons, Joomla 3 allows you to select the Detail View.  In my opinion, Detail View is better than Thumbnail View because you can see the entire file name. With Thubnail View view, Joomla truncates the file names which can be confusing if many of your filles start with the same letters or words. Detail View however does not give you a very large thumbnail. You can easily switch back and forth between the two settings.

Note:  It is best practice to organize your media files in properly named sub-folders.  It is also best to name your images in a logical matter.  If you just upload them with the number that the camera assigned to them - it may be difficult to find them at a later date.

Other ways to manage your media

Within Joomla there are many ways to upload images, videos and documents other than in Media Manager.  When you are creating an Article or a Module, you can upload the files from your computer from within the text editor.  TinyMCE, the default edito, has a button below the text area labeld Image where you can select from images already uploaded to your site or upload an image at that point in time. JCE Editor, a free third-party extension,  has a powerful image manager that allows you to create folders, rename files, delete files, see the sizes of the images and many other features.  With JCE Editor you can also Drag and Drop images for uploading.

You can also use an FTP program, your web hosts file manager or cPanel to upload images.  Just remember that if you do create a new folder using FTP or cPanel, you should copy an index.html file from one of the other folders under Images for security reasons.