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Typically a graphical style where there are one two colors. (A bit can be either on or off, so two options) Commonly black and white, but can be any combination depending on the style the creator is trying to accomplish. 

Typically small graphics that can be used to represent something, like items or actions

Sprites are generally 2D images used in games to represent objects. They can be animated or static, and come in different styles like isometric or top-down.