Matty - post #3 is not a quote, it's a standalone post into which I pasted the same code as is in #1.
I found the problem when I wanted to re-use an image which was so far "further up the page" that it was on a different one. It would also arise if you wanted to re-use an image from another post, and if the [ATTACH= code worked properly it would reduce the storage space needed on the servers.
As for bandwidth, is that really much of an issue these days? The forum reduces the displayed size of images if they are large anyway.