If you upload high resolution photos, and someone is scrolling through their feed on mobile data, downloading those photos is going to consume a large portion of their bandwidth. Proxying them through
images.hive.blog / https://images.hive.blog
allows the hive front-ends to reduce the size of an image when it's previewed, saving you huge amounts of bandwidth.
The proxy also supports changing the image format. This is necessary because not every device/browser supports all image formats. That way you don't have to care about browser compatibility when you upload a picture, because the proxy will do so instead.
Yeah, that's the point I have missed. We do need it, thanks for explaining.