A sprite is commonly defined as any graphic that is separated from a landscape or background. In ZQuest, examples of sprites include Link, items, enemies, and guys. Sprites' graphics can be edited by accessing Quest->Graphics->Sprites, and support transparency and usually animation. Sprites are placed in a different fashion from combos and the process may prove difficult for a beginner to figure out. See a particular sprite's Wiki page to learn how to use it.
Note that sprites can also refer to tiles or combos in less common usage.