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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. 

Uses two-dimensional "sprites", 2D images created and used on a flat plane, as opposed to the three-dimensional models or environments found in 3D games.

Related to the process of arranging game maps using a set of tile graphics (often call tilesets)