You drag the image to the screen and it replaces the placeholder image.
When you hover over the current image, don't you get the message "this is a placeholder . . ." under your mouse pointer?
I think the documentation states that the new image must be jpg or png, but a Photoshop image seems to work too.
In portrait mode, only one image shows at the top of the list of chapters, and that can be changed too.
But in landscape mode, all of the separate chapter images can be accessed by clicking the littel dots at the bottom of the screen when at the TOC page.