Desktop icons

Open the image you want to use for the file or folder in Preview. Do a ⌘+A (select all) and ⌘+C (copy).

Select the folder/file you want to change the icon on and bring up the Info pane for it (Control (right) - click on the folder and select Get Info from the contextual menu).

Click on the icon in the upper left hand corner of the Info window and paste the image there (⌘+V).

This demo if of an image with a transparent background so only the icon is visible on the folder.

A small picture can be used to change an icon rather easily.

1. Open the picture, select the image, then CMD+C to copy it to the clipboard.
2. Right-Click the icon, select Get Info, click it's icon at the top-left corner of the dialogue box, then CMD+V to paste your custom icon into place.

You can do this on most file folders within the system.

To add to that, you can a also create an alias for the volume and assign a custom icon as described. For example, the BDR icon (for optical discs) seems to have gone missing since Big Sur. Using an alias, it's straightforward to create your own (see below).

- Pie Lover

That was super helpful Old Toad! 😉