Yeah, lenscas answered it pretty well. The theme will be announced when the jam starts, and you have to make a retro/8-bit game around that theme, and inside of the limitations. 

When it comes to the sprite count: In general, this is equal to the amount of different pictures your game will/could render or needs. There are a few ways to get around this, which are mentioned in the Q&A section.

If you have pictures inside the build that NEVER get rendered nor are used in other ways then they don't count.

Hey! Just to extend on what lenscas said, Tiles count as sprites. but if you place 20 of the same tile on the map, it only counts as one sprite. Good luck, and have fun!

Hey! Just to let you know, you'll probably get more answers if you ask on the discord server (the link is on the jam page). There's a #team-up channel there, and last time I checked, plenty of people were looking for a team! Good luck!

From the Q&A
What about resizing?

• A: sprite is allowed to be resized for as long as it doesn't add any new detail. If you have a sprite file that is 32*32 and want to use it to cover the entire screen then you can and it will still only take up 1 sprite slot. However, the moment you add more detail to this sprite it will count as combining sprites. Look at the question above for more information on that.

Sorry for any confusion. Yes the theme did change and it seems we forgot to write a post here in the sudden mess we found ourselves in. If you are negatively affected by this then please contact us.

I now made a post about it, where I touch briefly why the decision was made https://itch.io/jam/retro-8-bit/topic/788513/theme-change

Again, sorry for any trouble this caused.

Of course! You can make your game with any engine/tool you want!

Do keep in mind that if you go this route, not everyone will be able to play it or is willing to setup dosbox to play your game. So, if you go this route (and I must say, it sounds awesome) I recommend to also have a download that works a bit more out of the box :)