Manual:$wgUseImageResize

Details
Set $wgUseImageResize to true if you want to enable dynamic server-side image resizing ("Thumbnails"). In newer versions you don't need to do this.

This setting was deprecated in MediaWiki 1.10.0 and re-added in 1.15.0, it will not work in MediaWiki 1.10-1.14

This parameter requires a functioning version of PHP's GD library or ImageMagick to take effect. It has no effect if no image processing tool is configured. Enabling resizing may generate error messages on pages with thumbnails if these components are improperly configured.

If you use ImageMagick, set $wgUseImageMagick to true in LocalSettings.php. Make sure the $wgImageMagickConvertCommand variable points to the (absolute) location of the convert command of your installation and that the command is executable by the web server process.