You stand corrected. You can embed the assets as base64 'data-uri' hrefs. Which IMO is the correct approach; sprites smack of the sort of suboptimal overoptimization that complicates workflow and exerts an invisible, mammoth drag on development, by slightly elongating each code-test-debug cycle. You have to get your raster assets -- which, let's face it, are probably being stored in .xcf or .psd format -- into a single .psd (or .xcf; hereinafter implied) so that a proper .png payload can be generated. Then you have to have either logic or CSS mess (or yes, SASS, or ...) to unpack that payload. The whole process is just so obnoxious. Why not just generate base64 strings and apply them to the site with jade (or grunt + jade, or grunt + ...0. SO MUCH EASIER. No scripting Photoshop (ew, COM+). No Guile, so you don't have to be up on your lambdas. Just use the tools you already use.

And, oh, IE8 does data URIs. Why aren't we all doing this again? Oh yeah, I forgot to write the blog post. :/