When you insert the graphic it is automatically inserted as In Line With
Text at the spot where your insertion point is at the time. Essentially, it
is treated as though it were a text character.
Secondly, graphic objects in Word are *always* anchored to a text line
unless you apply some form of Text Wrapping to the object. If there are no
other lines of text in the document, there is no place else for the object
to go other than the beginning of the document. If the document has more
than one line of content you can drag the object to anywhere on any line you
wish, but not to an empty area on the 'page'.
Once you apply Text Wrapping, however, the object is 'invisibly' moved to
the graphics layer of the doc rather than the text layer (IOW, it still
looks & prints the same). It will then be anchored to a paragraph rather
than inserted on a line and can be positoned anywhere on the same page as
that paragraph.
To apply Text Wrapping look for the Text Wrapping tool on the Picture
toolbar which appears when you click on the image. Alternatively, you can
double-click the image to get into the Format Picture dialog (Layout page),
or get there by ctrl-clicking the image & selecting Format Picture from the
contextual menu or by selecting the picture & going to Format>Picture...
Experiment with the different styles of text wrapping to get a feel for how
text behaves relative to the picture.
