I'm not 100%, but yeah, it's still about where it was first posted, not that every instance that views it has to store the image.

Now, if a post is cross posted to a community on another instance, that's my grey area for who's hosting it. The new instance may save their own copy so they're not reliant on the origin post being deleted or anything. But it might just point to the picture on the original instance

That's something I'd be curious to hear from some admin what the real answer is.

But if you example was double hosted than all the smaller "personal" instance would be needing to save every picture one of the few people on there view.

That would get excessive quickly