If you want to select a picture from your computer, browse for the image file, select the photo and click Insert. The picture will appear on your page in Word, you can also adjust the size, image ...

Annoyingly, however, Word continues to insert images as “in line with text”–the one setting you’ll probably never want to use unless you’re inserting an image into a table cell.

If you would like to add a text or image watermark to Microsoft Word document (single page or all pages), customize the font, layout, etc. see this post.

There's nothing wrong with a white background, but Microsoft Word lets you change the color of a document's background. You can even use a picture, but don't get carried away.

Understanding how text interacts with an inserted object in Word is the key to getting the look you want.