I would also very much like to know more about this feature. Surely there is some official documentation somewhere?
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Forgive me if this is too editorialized for this environment but from my perspective, the urgency of this issue is growing exponentially as the images that must be stored entirely in Base64 inline with the entirety of the metadata also grow out of quality expectations. I have been a firsthand witness to the sort of chaos caused by syncing any substantial amount of these files over iCloud in a migratory context. Even just a frank, user-facing notice of warning regarding risk/reward of making a point to add a profile image to every single new contact would resolve a huge amount of the general confusion resulting from the sort of disruptions this can cause.