It just means that your game should look like a GameBoy game. First and foremost this is called "GBJam" so you're not fooling anyone by making an FPS and slapping a 4 color palette on it. It's about working within the limitations of the hardware, or whatever approximation you can achieve with your skillset
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Given this example, https://gamefaqs.gamespot.com/gameboy/585702-faceball-2000, would a very primitive 3D game be acceptable?