I cannot paste images into the Markdown or Rich Text editors. Image files in the clipboard cannot be pasted into the editor unfortunately. It does not work when I copy an image through Finder (MacOS file explorer), nor does it work if I take a screenshot. I can paste these images into other applications just fine (e.g. Gmail editor, Evernote, Apple Notes, MS Word)
I can however, drag and drop images into the editor just fine.
We need a specific case to narrow it down. From what application you're copying from, and what data (text, image, etc.) and to what editor you're pasting, whether it's Markdown or Rich Text
I was able to solve this issue thanks to your insightful response. It turns out my issue was limited to the screenshot grabbing software that I am using: the name is "CleanShot"
The reason for the issue was that when a screenshot is taken, CleanShot commits both the image data and temporary image file into the clipboard. When pasted many applications know what to do with this, but Joplin could not paste it.
I changed this default behavior on CleanShot to only copy Image data into the clipboard. See screenshot below. This solved the pasting issue on Joplin.