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Hmmm, interesting. I’m just using the default Lemmy interface (lemmynsfw.com instance) and Firefox on a Windows 10 PC, at the moment. Definitely no larger version appears when expanding or clicking.
Edit: It loads on Connect on Android, but is a two-stage load with the higher quality version loading after the lower quality version. For some reason that isn’t happening on the PC web client, must be a bug.
The web interface sets a maximum height for the images (what’s not even very useful, because they are not expanded by default).
I have no idea why the devs choose that behavior. But you can view them without CSS if you open the image in a new tab.
Weird, opening the image in a new tab is still the low-res version.