The WordPress media settings panel allows the site administrator to set a number of different settings that affect media that has been uploaded to the site. These settings can be found by logging in as an administrator and going to the Settings, Media panel.
There are a number of different things you can change on this panel. When an image is uploaded to WordPress, that image is saved in its original size. However, WordPress does offer users the chance to display the image as a thumbnail, as a medium sized image, or as a large image. Administrators can set the sizes for these three options. This means thumbnails can be larger than usual, or large images can be fairly small. WordPress will automatically crop images so that they fit the dimensions defined for a thumbnail.
Administrators can also change the default directory where uploaded images and other media are saved. They can determine how these images are organized. The default option is to save images by the year and the month in which they were uploaded. However, that can be changed.
Many administrators adjust the image size so that users do not upload huge images that distort the overall look of the website.