Library is the first tab which contain all the uploaded media files provided with some options like search box, grid view, filtering and some actions like deleting or adding as shown in the image below.
Add new is the second tab were user can add the files to the WordPress Site by Selecting the files or by just dropping. The image below display the Add New tab.
Now the page redirects and provide some options for editing the image, user can give the Caption, Alternative Text or Description for the image by using the input text boxes as shown in the image below.
By clicking the Edit button provided at the left corner under the image will give additional options for image settings like Scale image, Image Crop and Thumbnail Settings. After performing all the changes Update button provided at the right corner of screen as shown in the image above.
Set the image size and save the given changes by using the Save Changes button. There is also an option for organizing the uploads on the hosting account into month and year based folders. This option is enabled by default. All the media files are divided depending on the month and year and uploaded automatically to a folder /wp-content/uploads/.