When uploading media assets to the media library they are stored in the current media storage. To enable this feature you have to register a storage service first. Besides storing the uploaded media asset the media storage is also responsible for storing all resized and cropped versions of images that you create.
When you create a new application from one the Project Templates the project will be setup with the File Storage service from scratch.
To register a storage service you need to register a service that implements Piranha.IStorage in your Startup.cs. Piranha provides two standard packages available for media storage that you can choose between, you can read more about them in their respective section.
You can easily implement your own storage services by implemented the interfaces Piranha.IStorage and Piranha.IStorageSession. You can read more about this here.