Do people at Google not use Gmail? Why don't they improve it?

I have a feeling you're not really looking for answers, but ... Yes, we use Gmail. We do try to improve it. For example, I think smart compose is a pretty nice improvement.

I'm not sure about the specific issue you're facing. For me, attachments show up as these rounded rectangles and images in the signature don't. I'm currently on mobile, so I'm not sure about the web UI. Can you post a screenshot?

Yes, but the overwhelming majority of Googlers don't work on gmail.

My cynical take is that they have 2 billion users and aren't really interested in making significant changes to existing functionality.

When I was at Google, I really wanted fixed-width text (I managed to add this with a user style) and tree threading.

There's a paperclip next to the date and if you hover over it, a tooltip gives the name of the attached file.

I don't think I've ever confused an attachment with an image anyways, but there at least seems to be a standardized way to differentiate them.

Google employees do use an internal version of gmail. (I don't work at Google though)

Inbox was a pretty big improvement, until they killed it...

People who put images in their signature should be beaten with clubs and left bleeding in the moonlight.

I have to imagine most users never actually login to the web app and interface via a mail client, either mobile or desktop.

It has been years since I logged into gmail, and the only reason I did was to re-enable IMAP which they disabled on their own for some reason.

they don't improve it because googlers think everything they build is the fruit of their genius.