Everybody tends to have their own preference when working with graphics, including whether to use embedded or linked graphics. There are advantages and disadvantages to both options.
One of the biggest points to consider is the nature of your graphics: Do they change often? Who will need to access and modify the original file? Who has access to the linked files (particularly on a network and in a large organization where files may be inadvertently moved or deleted)?
It Author-it, you may choose to use a combination of both embedded and linked graphics.
When you embed graphics, the same graphic is used in all outputs. The graphic is stored in your Author-it library, so it can never be misplaced. However, having a large number of graphics will impact the size of your library. Modifying the original file (in its original location) will not affect the graphic stored in Author-it. If you double-click the graphic from the File object preview window, it will open the graphic in the associated image editor you have installed on your computer.
When you link graphics, you can use a different graphic file for each output, if you wish. The graphics files are stored externally to the library (for example, on your computer or on a network drive). When you publish, Author-it looks for the linked graphic at the path specified on the File object and copies it to your publishing folder so it can be included when distributing your files. However, if the original files are moved or if the path to them changes, you will get error messages when you publish.
To avoid this, if you're using linked graphics we recommend that you store them in one folder or a limited number of folders, and specify the location of the folder in the File object template(s). For example, Author-it's default templates include a "Linked Graphics Directory template," which is used to specify the directory where the linked files are stored. All of the other "linked" templates are based on this template, thereby inheriting the directory location. This means that if you want to move your linked files, you only have to change the main template, which automatically updates the other templates based on it and rach File object that has been based on those templates.
The biggest disadvantage of using linked graphics is the possibility of misplacing graphics. The biggest advantage is that you retain a great degree of control - if the original graphic is modified, Author-it is updated automatically.