Billboarding is one term used to describe the use of sprites in a 3D environment. In the same way that a billboard is positioned to face drivers on a highway/motorway, the 3D sprite always faces the camera. There is both a performance advantage and an aesthetic advantage to using billboarding. Most 3D rendering engines can process “3D sprites” much faster than other types of 3D objects. They are also easier and faster to create than 3D characters.
More often sprites/billboards now refers to a partially transparent two dimensional animation that is mapped onto a special plane in a 3D scene. The sprite (billboard) plane is always perpendicular to the axis emanating from the camera.