To create a blog, first add a couple of categories (eventually grouped inside a parent category).
Now you can start creating posts: Posts › Add New, fill the content, choose tags, upload the blog main image via Featured Image and click on Publish. You can select only the child category of the category group if you wish.
Repeat the above steps to add more posts.
Note that you are free to insert anything in a post.
To list the posts, go to Pages › Add new and choose the Blog Default template from the Template dropdown from the Page Attributes box.
Assuming that you work with lots of categories / category groups and you want to create a blog template that displays posts from a category of your choice, make sure that when creating the blog template page, in the Posts Category box choose the category from which you want your posts to be displayed. Note that the Posts Category box is designed only for blog and will appear( after the Page Parameters box ) only after you have saved the page as Blog template.