To set a background image for the chess board, choose Settings > Board > Background > Background image..., then choose an image file and click OK.
The images can be any size, and Chess will automatically resize them to fit the board (your original files will not be modified). However, you should try to make sure they are square, as they will be resized to fit a square, so the further they are from square, the more distorted they will appear. You can use almost any filetype you like, including .jpg, .gif, .png, and many other popular formats. See the full list of filetypes at the Pillow reference page.