Frances,
Does this mean that it is saved in Files? That later we can go to
Files and see the attachment?
If the setting is "Allow" the attachments are saved on site, regardless of any member's attachment size limits. But you access them through the Messages section (in the messages they are attached to), not through the Files feature.
Photos and other image file formats are a special case. In addition to appearing in the messages they came from, they are also shown in a Photo album named "Emailed Photos".
Shal