If I go into attachment settings I can set "Maximum dimensions for attached images" if I enter for example 600px when a user uploads an image in a thread, the image will be resized to a maximum of 600px?
The Admin >> Options >> Attachments settings control this.
Maximum attachment file size: (the max allowable KB size is controlled by your server PHP setting)
Maximum attachment image dimensions: (larger images will be reduced)
Images will be resized to whatever maximum dimensions in pixels you set in ACP >Settings> Attachments. NB: there is also a max attachment file size in KB.
Note that clicking is not necessary to upload, images can drag & dropped into a post.