Can’t upload images at all to the site, they disabled it due to the CSAM attack a few months ago, not sure when they plan on fixing it.
There is a way to add an avatar without uploading it to the site but it is a bit complicated and requires the api, it also is required that you host them somewhere else i.e. imgur, file.coffee, gitlab, codeberg, anywhere that lets you host the images.
I was able to easily do it using the Dev tools in the browser, it’s not very difficult when you know what to look for in the network packets, but for someone who’s not a web developer or worked with json to might be tricky, and might carry some risk if they add them incorrectly (not sure if lemmy prevents corrupting user settings with safeguards but better safe than sorry).
What would be very nice is if the Client Would just allow for using a URL in place of an upload just like what can be done on posts and comments