When the user selects option 1 in the menu, the code prompts the user to input a file name and then calls the LoadImage function. This function returns a pointer to an Image data structure, which is stored in the "image" pointer. This allows the program to access the image data for processing.

For the menu options 2 to 18, the program performs various operations on the image data stored in the "image" pointer. Each of these operations is implemented as a separate function, which takes the "image" pointer as a parameter and returns the processed image. These functions modify the image data stored in memory by changing the values stored at the memory addresses pointed to by the "image" pointer.

The program also uses other pointers such as "image_watermark" in the "Watermark" operation, which is used to store the watermark image data. This pointer is declared and initialized to NULL and is later used to store the watermark image data after it has been loaded from a file.

Overall, the code extensively uses pointers to manipulate and access image data stored in memory, allowing it to perform various image editing operations efficiently.