Thumbnails are automatically created and cached to your joomla tmp directory. You have the ability of selecting predefined thumbnail sizes or setting your own custom size.
You are provided with many options the configure the size and look of the gallery as well as the behaviour of the fancybox enlargement. You are allowed to implement many instances of the gallery on one page.
I used the method from the developers website of using the module in an article. works beautifully.
I have also contacted the developer about some other useful features, and he has responded very quickly about them.