Sprite

A sprite (Japanese term: 立ち絵, Hepburn: tachie, lit. "standing image") is an image used to represent a character. An NPC with one line will probably only have a single static sprite/image (if they’re visually represented at all). Characters with more screen time generally have multiple expressions, poses, and/or outfits and would thus have multiple sprites. Some sprites may be animated (commonly with programs like Live2D or EmoFuri), but most games currently have static sprites.

Compositing

An example of sprite compositing. (1) The parts of the sprite, with separate hair overlay, eyebrows, eyes, blush, and mouth. (2) The parts are layered on top of each other with visible bounding boxes. (3) The final sprite

Sprite compositing is when multiple images are compiled together in "real time" to be viewed as a single entity. Generally used to layer different elements of a sprite together to allow for smaller overall game file size rather than having a completely different pre-compiled image for each different pose and expression combination.

In Ren'Py, sprite compositing is referred to as Layered Images or Live Composite. (Layered Images being the most recent tool, allowing for more complex sprites.)

Sprite Sheets

A sprite sheet is an image with a sprite’s expressions/poses, usually used with a game or animation engine for composite/multi state sprite optimization. Packing sprites into a single sheet optimizes file load and render time in many cases where it's needed.

In visual novel terms, it may also refer to an aesthetic layout of a character sprite’s images that shows the different poses/expressions of a character, usually for inclusion in the game’s art book or for promotional purposes (ex: crowdfunding graphics).