When you insert an image, you have the option of using a vectorized version of that image. Because it is then represented as a collection of many paths, it will not lose detail as the size is increased in the same way that a rasterized image will. To enable, simply select the Use Vectorization of Image checkbox, and use the slider to set the detail level. The higher the level of detail, the more paths will be used in the resulting vectorization. Higher detail settings can take a very long time to calculate, especially on larger images. It is recommended to resize large images (> 1 megapixel) to a smaller size before vectorizing.