You can upload and import any MS Word document file to Google docs/drive as you can download and export a Google docs document to you computer and open it with MS Word.
In Gmail there is no insert/upload image option by default. Let me show you how to enable the option so you can upload and insert an image into the email or insert an image by providing url.
Remember as a kid you played with a mirror, putting your face to the side of it and your friends were laughing at the funny symmetry of your face and your faces reflection?