I click “add photo”, the system dialog opens, I select a photo, and then that gets sent to the app. Somehow, Apple managed to screw that up.
I will say that in the event that an app is not using PHPickerViewController, sometimes it's still possible to emulate it by exiting the app, going into the photos app, selecting the photo, selecting the little "send" arrow in the bottom left, and then picking the app to send it to. I do this all the time with the Slack app. Copy-and-paste may be another route. Sure, it's a silly workaround for a feature that should have been there from day one, but c'est la vie.
[0] https://developer.apple.com/documentation/photokit/deliverin...
That’s exactly how it works for me in iOS at the moment.
In addition, I can see the list of photos each app has been granted access to in Settings > Privacy & Security > Photos.
Photo centric apps may choose more extensive APIs, but those require OS-level permissions (the user explicitly giving access)