There can be more than one option, separated by vertical bars. If a caption is used, it's the last thing in the list.
Here's a demonstration of the most useful options:
Description and Syntax
Demo
Thumbnail with caption, width specified, floating off to the right of the text.
[[File:Sideling_Hill_West.jpg|thumb|200px|Sideling Hill, 200 pixels wide]]
Sideling Hill, 200 pixels wide
As above, but with height specified. Note the x in front of pixel specifier.
[[File:Sideling_Hill_West.jpg|thumb|x50px|Sideling Hill, 50 pixels high]]
Sideling Hill, 50 pixels high
If you specify both height and width, the picture's aspect ratio is preserved even if you pick sizes of the wrong ratio. The smaller dimension you picked "wins."
[[File:Sideling_Hill_West.jpg|thumb|1000x20px|Sideling Hill just 20 pixels tall]]
Sideling Hill just 20 pixels tall
Add the left option to float the image to the left of the page.
[[File:Sideling_Hill_West.jpg|thumb|left|1000x20px|Tiny on the left]]
Tiny on the left
You can use frame instead of thumb for bigger images, if you dare. frame ignores any size specification you put into the syntax. The picture may still be smaller than its actual uploaded size, but only if the user's preferences are set for a maximum size.
We're not showing you what that actually looks like, because it's gigantic. The tunnel isn't shown actual size, but it may as well be.
Without the frame or thumb options, the caption doesn't show up. Also it's not floating to the right or left anymore, but is inline with text.
[[File:Sideling_Hill_West.jpg|100px|Sideling Hill, 100 pixels wide]] blah blah blah ...
blah blah blah blah ...
But if you let the image be inline, you can use the baseline, sub, super, top, text-top, middle, bottom, or text-bottom options to change the vertical alignment of the image relative to the text it's in.