When the Build Action is set to Resource, the file is stored as a resource inside the compiled assembly. In our case, image1.png was set to Resource inside the project binary, which makes the actual image file unnecessary while deploying the application.
When the Build Action is set to Content, the resource is not included in the assembly. To make it available to the application, Copy to Output Directory needs to be set to either Copy Always or Copy if Newer.
This makes it more appropriate for when the resource needs to change often and a rebuild would be undesirable. If the resource is not available in the output directory, this will render a blank image while executing. If the resource is large and not always needed, it's better to leave it to the resulting assembly.