This info was originally posted by darthatron.
So, each sprite has a limit to what it can contain...
* Must be <=16px (32px for monsters) wide and <=40px high.
* Must contain 15 colors or less (+1 background color). See below for useable palettes.
* Must be 64x64px (needs verification)
* Can have up to 47 colors (+1 background color).