Does it matter how long and wide an image is when using CSS sprites? I noticed the SO sprite image is one long image, with all the sprites on top of each other.

Would having the sprites grouped together increase performance?
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Due to png’s filter/compression algorithm, large swaths of uniformly-colored pixels barely contribute to the file size.
The minor file-size cost of arranging your sprite vertically (like Stack Overflow), as opposed to squeezing your icons into a perfect square, is probably well worth the benefits of having cleaner CSS and a more maintainable sprite.