A central store for your images and files used across the dashboard.
Without a library you end up uploading the same logo into every welcome message, every panel, and every embed. The library is one store where you upload a file once and pick it from any message editor afterwards, so the link stays stable and files never duplicate.
The library picker appears in every message editor on the dashboard: welcome, tickets, panels, embeds, and the rest. You open it and pick the file instead of uploading it again.
Without a library you end up uploading the same logo ten times: into the welcome message, the ticket panel, the rules embed, and the rank card. The library breaks that: you upload the file once, then pick it from the library picker in any message editor on the dashboard.
Deduplication works behind the scenes: uploading the same file twice does not consume your space twice. Storage is capped at 100MB, and a bar on the page shows how much of it you used.
Managing it is simple: upload one or several files at once, search by name, and delete permanently with no undo. Which is why you should name your files clearly from the start, since search by name is your only path in a large library.