Today I wanted to add some screenshots to a GitHub readme for the sake of documenting. While this wasn't particularly hard, I do had to iterate a few times before I got it right.
Hosting the images
You could simply add the images to your repository and reference them using the raw url's, but this isn't very efficient. Using this method, every request needs to go through GitHub's application layer. It's far better to make use of GitHub Pages, a feature purely designed to publish web content. I also like how you're not polluting the repository this way.
Referencing the images
I'm using the - oh so beautiful and simple - markdown format for most of my readme's. The syntax for embedding images looks like this.
I hope this post fills in the void I stumbled upon when googling for useful pointers earlier today.