Late Note:
This was broken for several months, but is now working again.
I Like grg's method, & in fact use it myself quite a lot for quick edits to posts.
There is another method, slightly more work, but this not only reduces the apparent size on screen, but also the actual image size - useful for if you're on the phone, etc.
Assuming it's your own upload, start by dragging your image into the uploader as usual, this will generate markdown like this
[![enter image description here][1]][1]
[1]: https://i.sstatic.net/skJEn.jpg
take that bottom line & duplicate it..
[![enter image description here][1]][1]
[1]: https://i.sstatic.net/skJEn.jpg
[1]: https://i.sstatic.net/skJEn.jpg
Then you make two changes...
in one link, add a character after the last existing character of the file name (not the extension)
You can use m for 'mobile' or s for 'small square'
In the other, change [1] to [2]
so
[1]: https://i.sstatic.net/skJEn.jpg
[1]: https://i.sstatic.net/skJEn.jpg
becomes
[1]: https://i.sstatic.net/skJEnm.jpg
[2]: https://i.sstatic.net/skJEn.jpg
You then change the original inline tag to reflect both versions...
[![enter image description here][1]][2]
in this, the first ref [1] is the display & the second [2] is the linked image.
The result is this...
[![enter image description here][1]][2]
[1]: https://i.sstatic.net/skJEnm.jpg
[2]: https://i.sstatic.net/skJEn.jpg
It doesn't actually matter which line becomes which option, so long as your inlined link refers to the smaller image for display & the larger for click-through.
Which then displays as this...
If you click it, it will open full size.
or alternatively as a small square...
Note I've duplicated the mobile line & added a small square as [3] so both versions refer to [2] as their full-size version.
[![enter image description here][3]][2]
[2]: https://i.sstatic.net/skJEn.jpg
[3]: https://i.sstatic.net/skJEns.jpg
Which then displays as this... more useful for gallery views than rectangular pictures.
As pointed out by grg in chat, this is actually an Imgur feature rather than SE.
There are various sizing options...
s = 90×90, b/t = 160×160, m = 320×320, l = 640×640, h = 1024×1024.