Lantern is a minimalist free premium wordpress theme from fabthemes. This is a blog type theme with features like, custom menu, featured images, jQuery featured image section, custom header, theme options, banner ads etc.
The featured image section setup on different templates.
The jQuery slideshow on the homepage is populated by the featured images from posts. You can add a featured image to the posts while you create a post. In the theme option page you will have the option to select a category from which featured images of posts will be pulled. Y0u can also set the number of posts to be shown.
On single posts
On single posts the featured image of that post will feature in the space of slideshow as a static image.
On all other templates
On all other pages, the slidehow section will be occupied by the custom header image. Check the screencast below to see how to setup the custom header image