When adding a photo to an observation (creation form or comment), click “Annotate photo”.

Photo editor with the Draw, Text and Select tools and the colour palette
The photo editor.

The editor offers freehand drawing, text, selection to move an item, colour choice, undo / redo, and “Clear all”. “Done” saves the annotated photo.

On a tablet, you annotate with your finger or a stylus, right after taking the shot.