I am also having issue with the image thumbnails. The documentation says that the function.php has the sizes and that thumbnail are generated automatically, this would be great but doesn’t seem to be my case. I insert the image and it pulls the full size image and and just squishes it down to the dimension. If I right click the image and say view image in new tab it is the full size huge image.
So it seems that thumbnails generation and/or centercropping is not happening.