In the Atari day's (trust me I was there) they were called player/missile graphics. Others called called them sprites. Basically the same concept. I used to program a lot on the Atari/128 believe me you guys got it good and easy. If ya didn't know hex and memory concepts forget it.
They evoled out of a need to do images that could do special operations on, like- collisions, animations,image control,etc... that would take up some pretty awesome calculations just to move an object against a background. Think of how many checks it would take to move that object and not destroy the background image, test for collisions, then tell what it hit and where it is.
So they are special images to make things easy for you, without all the fuss and muss. Without the degree in computer science.
Also what indi said
It's not the size of your code but how efficiently you use it!