Why can't I paste an image into a PDF Doc in Preview? (need to insert wet signature)
It's not the same concept.  There's annotating a PDF and then there's editing a PDF.

Annotating is also known as "marking up" a document.  Inserting an image is editing it.  Preview isn't a PDF editor.

Think of it as a written document submitted to a teacher, professor, or a manager at work.  They may take a red pen and write comments in the margin, make several comments and circle it or box it in, strike out portions, correct spelling, etc.  However, inserting an image would change the whole document.  The reviewer isn't going to rewrite/reformat your document so that the image would fit. 

To get another perspective of this, consider the two PDF products from Adobe are:


Acrobat Reader (Free)
Acrobat Pro ($12.99/mo)


Reader allows you to do everything that Preview does from marking up, signing and even filling out and collecting responses from PDF forms.  However, you can't edit the document (which includes inserting graphics).  For that, you need the Pro version (if using Adobe; there are other editors available on the market).

Signatures

Preview allows for the capture of signatures via the following methods:


Sign on your trackpad.
Capture with your camera
Capture by using your finger or Apple Pencil with your iPhone or iPad


You’ll find this on the Markup Toolbar and then selecting Sign.  You can find full details on how to do this on Apple’s support document Fill out and sign PDF forms in Preview on Mac.

Acrobat Reader allows you to use a graphic image as your signature.


  To sign a PDF document or form, you can type, draw, or insert an image of your handwritten signature. You can also add text, such as your name, company, title, or the date. When you save the document, the signature and text become part of the PDF.


(Emphasis mine).