Problem adding images without taking up whole background

A third way to understand 'dragging from photobin'.

The idea is to make the most common task for compositing images on your canvas much easier and above all 'flexible = non destructive'. That's why the process uses 'smart layers'.

You have defined your canvas, size and resolution.

You have a number of files to 'drag' on that canvas. Some will be smaller than the whole canvas, beware of the resolution. You might have to upsize them, losing quality. Others (most in my case) are already much bigger in pixels than the resulting canvas.

So 'getting' one of those files on the canvas absolutely requires resizing the dragged image, moving it, possibly straighten it... keeping in mind the resolution. Since the program can't know what you have in mind, it cares for the first step: dragging the image into the canvas while allowing you to see the max size of the dragged image and all the handles to do this. Hence the necessity to show all the image and to see it better ('fit in canvas'). What you see is a 'preview' for doing the best of your image, using a 'smart layer' in your layer palette. That layer displays the current state of your image depending on your choices for size, location and orientation. You can always change your mind later in your editing process. The smart layer is always calculated from the original dragged image. No quality loss. Warning you visually if the dragged image has to a low resolution.

You can still use older ways for bringing new images on your canvas, like the 'place' command or dragging layers from files opened at the same time. You don't get the ease of use, speed and flexibility (destructive workflow) of the 'drag from photo bin).

@Backinthegrind12, Your blank background canvas is too small or too low of a resolution. Make your blank canvas larger and higher resolution. The blank canvas needs to be larger than the photos you want to drag into it. After you drag and drop a photo from the bin onto the blank canvas you can resize it and move it around. When you've placed all the photos onto the blank, the whole thing can be resized as needed.

If you have a blank canvas that is 1600 px X 1000 px and you drag a photo that is 1920 px X 1200 px onto the smaller blank canvas, of course it's going to fill up your blank. But, you can click on one of the "handles" on a corner and drag it smaller to suit.

Be like Nike.... Just do it.  Make your canvas and  start dragging. Resize them once they are on the canvas.

When you drag an image from the photobin onto the canvas, it becomes a smart object.  Wwhat that means is that all the info about the picture is still there, regarless of how small you make it.  Smart objects are a good thing, with one bit of caution: You have to often simplify that layer it's on to apply many effects, and filters.