Back in the ye-olde days of html formatted email, we used to be able to provide an IMG tag and a SRC of where the image exists on the internet. It seems like with Outlook 2016, I can only insert a copy of the picture instead of just having the picture display from a hyperlink. Although I can provide a "click here" text hyperlink to the image, I prefer to have the image inline with the email text.
My reasoning is... If it send a mass mailing to everyone in the company, I don't want to waste disk space by having copies of the same image in everyone's inbox. Only one copy will reside on our intranet.