There are three main ways you can import imagery into Google Earth:
Image overlay - (Add > Image Overlay) This is an image that is draped over the surface of the earth (though it can appear elevated as well). Among other things, this feature is useful for importing image files of maps. The picture to the left is an example of an image overlay.
Photo - (Add > Photo) This is an image placed in a geographic location that you and other users can fly into and navigate. You can see examples in the Layers panel > Gallery > Gigapxl.
GIS imagery - (Google Earth Pro only: File > Open) These are GIS-related files, such as .tif, .geotif, .ntf, .img, etc. Google Earth can display these images in the correct geographic location as specified in the original file.
The larger your image files, the more performance becomes an issue. If you are using large sets of images, consider using KML Regions.