It is okay if effects such as explosions, dust particle, sword slashes, etc. are larger than 8x8? If not, that would definitely hinder the game feel/juice.

I consider particles to be multiple images or sprites being used. The radius of particles aren’t limited, but the sprites themselves are. However, if the engine you are using doesn’t allow you to have custom particles or the particles being used aren’t using sprites then go for it. Trying some of the entries in the previous jam should help give you idea of what people did in relation to particles (Inferna’s player is composed of almost entirely particles and uses particles quite a bit).