The main thrust of this update is, per Google:

"By adding more context around images, results can become much more useful, which can lead to higher quality traffic to your site. You can aid in the discovery process by making sure that your images and your site are optimized for Google Images. Follow our guidelines to increase the likelihood that your content will appear in Google Images search results."

Google's tips for creating a "great user experience":

• Make sure images are relevant to the context in which they appear. Images should be relevant to page topic, and add original value. "We particularly discourage pages where neither the images or the text are original content."
• Place images near relevant text, and most important image near the top of the page.
• Don't embed important text in images, and put ALT attributes on images.
• Create good-quality content, as "Google considers the page content quality when evaluating images."
• Users search on Google Images more from mobile devices, so use the Mobile Friendly Testing Tool on your pages.
• Use logical URL paths to help Google understand your images.
• Use relevant page titles and meta descriptions, because Google Images uses these to generate titles and snippets to explain image search results.
• Add structured data so Google can display your images as "rich results" that can drive better-targeted traffic to your site.
• Use the latest image optimization and responsive image techniques for max loading speed.
• Use sharp images.
• Use descriptive titles, captions, filenames, ALTs and surrounding text. (See the video with Matt Cutts re ALTs.)
• Avoid keyword-stuffing in ALTs.
• Create an image sitemap.
• Group adult-only images together at a common URL, and add suitable metadata, e.g. <meta name="rating" content="adult" >.

Once again, Google has told us what it wants. Let's do it.