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You are missing the last part of the build information. I have 365:

Microsoft® Word for Office 365 MSO (16.0.12624.20348) 32-bit

But the Pictures button is not a drop down. It goes directly to the Open dialog in PPT, Word and Excel.

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Oops, I missed the "hi insiders" on my first read.  Ignore me

PS: I REALLY hate that features depend on build and channel. Same build number can have different feature sets.  This is too confusing!

Yes, Publisher does seem to be an ignored orphan child. But it is part of the "Office Family", so you should be able to use the feature in one of the other apps, and copy/paste the results into Publisher.

Unfortunately, the "Office Suite" is a marketing name for a grab bag of programs that. There is a little overall co-ordination, but each program is worked on by a separate teams of programmers.  Their managers decide which features are implemented and how.

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If you want a "new" feature added to a program, submit a "feedback" to MS.

“Official” MS does not pay much attention to this forum. However, you now can send your complaints and feature requests directly to MS developers and managers using 1 of the 4 possible “Feedback” mechanisms described in this link (1 Windows specific, 3 for both Win and Mac):

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https://answers.microsoft.com/en-us/windows/forum/windows_10-windows_install/send-feedback-to-ms-developers/506e7654-8ced-405b-911e-c58d8f253069

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Please post a share link to your feedback, back here, so other people who find your question will be able to vote for it and add their comments to it.

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Collection of MS “UserVoice” web links:

http://answers.microsoft.com/en-us/windows/wiki/windows_10-desktop/ms-suggestion-box-sites-at-usdervoicecom/7397119c-6d48-49e6-8d94-7bd0a50d214f

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MS Feedback article, says basically the same thing:

https://support.microsoft.com/en-us/help/4021566/windows-10-send-feedback-to-microsoft-with-feedback-hub

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Looks amazing... how do i get it?

i'm an Office 365 Subscriber, but my "pictures" doesn't have a drop-down menu. How does this feature get updated?

thank you

Make sure you have the most up to date Office update.

New features are rolled out in a "controlled" manner, so not everyone gets them at the same time. Strangely enough, even people with putatively identical installations (same version and build numbers) sitting side by side in an office may not both get the new feature at the same time.

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Be patient, it will show up eventually ...

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If you are impatient, try doing Office repair a couple of times.

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If that doesn't work try uninstalling and re-installing, a couple of times.