Thanks to everybody. Honestly, I understood most of ti from the beginning. What I was confused with is specifically for text files. I uploaded jst one to test. I know if I will click on send to editor it will be available in the post. But does it mean ‘linked to file/page’ I did not get.
Just to let you know, that server where I test WordPress does not have ImageMagick. I could not test thumbnail creation. But I know it works. I tested it before on another server.
Thanks.