[T-R]

I think the issue is that the images are different sizes, so putting size/location into CSS would require generating both CSS and a Sprite Sheet for each request.

With Data URIs, they can convert to Base64 ahead of time, and then just concatenate them into a JSON request as needed. This potentially saves them an HTTP request per page load because it means the CSS can be static. The decoding overhead is on the client, which in most cases should offer better user perceived performance than an extra HTTP request for a dynamically generated stylesheet, so it's just a matter of whether it's outweighed by the increase in file size.