Images can technically use the whole 32-bit color palette, and sprite sizes are unrestricted. You should know that the game employs a 16x16 pixel collision box for the hero and most entities by default, so if you want high-resolution sprites, you'll need to use Lua scripting to alter the entity size and origin point (which also determines their map positions). For uniformity, this also applies to their sprites.
Staying within multiples of 8 pixels for the collision boxes (sprites don't matter) is recommended to avoid collision issues.
Similarly, tile dimensions are not limited so long as they are multiples of 8 pixels squared (the editor will steer you in this direction).