Microsoft is enhancing Notepad by introducing image support, as indicated in recent Insider builds. A new image button is expected to appear in Notepad's toolbar, although the feature is still in development and not fully implemented. Currently, clicking the button leads to a "What's new" dialog box. Notepad has evolved over the years, adding features like formatting options, table support, and Copilot integration. Users can disable the new image feature for a more minimalist experience.