If you want to create a book based on images from folder(s) on your server, open "ARI Smart Book -> Books" page, click by "New" button and set "Pages are created from" parameter to "Images" then enter path(s) to folder(s) with images in "Pages source -> Directories" parameter. For example if images are located in <joomla_directory>/images/book1 folder, populate "Directories" parameter with the following value:
images/book1
BTW, documentation for the extension is available
here. "Quick start" is described
here.
Regards,
ARI Soft