Hi Trent, welcome on these forums. The plugin uses (an adapted) FancyBox version 1.3.4 which does not have the thumbnail functionality that FancyBox 2.x has.
There is an update planned that will allow to switch to Fancybox 2 but as that version is completely incompatible with the older version options, it will have some impact on settings/options.
Also, Fancybox 2 uses another license and it’s not free for commercial use, demanding additional fees for many of our users. We are currently exploring different approaches on how to implement Fancybox 2 so cannot say when or how at this point.