For print, images should always be inserted at full size to ensure the highest possible image resolution. The smaller size options compress the image, meaning it won’t be exported at the highest possible resolution.
For ebooks or webbooks, it is best to compress the images. Some distributors charge a digital delivery fee that increases with the size of your book file size.
You can compress the images by setting them to large or medium, or in the Ebook Theme Options. Access your Ebook Theme Options by going to Appearance > Theme Options and selecting the Ebook Options tab.