1. Commons images can be embedded using wiki text

2. Commons image can be used as statements. Users need to create a property with Data type as Commons media file. When adding a Commons image as a statement, the text field is like a search bar for Commons images or users can just write the file name.

3. Wikibase Local Media is not related to InstantCommons. It is a different tool and used to store media files within the wiki. It's a nice tool to have beside InstantCommons.

Conclusion: InstantCommons and Wikibase Local Media are both nice to have feature. It helps users a lot when they need to reference/use photos for their entities.
Personal opinion: we can implement a button for users to toggle this features in the UI. When we decide to roll with it, we have to document it so others know and use.

@dang and I had a chat and think this looks great. Dat will check with the engineers to get an estimate on whether activating this for all instances would require significant ressources or not. Next steps would depend on what comes of the investigation.

I think there are no big red engineering flags and we won't know for sure without just trying it. I've therefore moved it to done and we should talk about picking up the parent

Exciting feature to have, and good that it is (apparently and relatively) straightforward. I was looking for just that on the Wikibase Telegram channel. Thanks for pushing this forward!