All mods together must share a total space of 2048x2048 pixels (this is mentioned in the games debug log). The sprites.png of all mods are packed into this limited space, when the space runs out the next mods will get rather random graphics.
I did an experiment with a number of mods to confirm this theory. In the experiment I loaded a number of mods with large sprites.png files and then noted when the graphics started becoming faulty. Look at the middle example below, the first four mods will work fine, the fifth mod will not, because it doesn't fit anywhere.
Now if the creators of those mods had used smaller sprites.png files, just enough to fit their graphics in, all mods would easily have fitted and there would have been space to spare for a bunch of other mods as in the rightmost picture.

These are the rules you should follow when creating a sprites.png file if you want it to play better together with other mods:
keep it as small as possible
use sides that are 32, 64, 128, 256, 512, 1024 or 2048 pixels wide
keep it as square as possible without wasting space (for example 256x512 is better than 128x1024)
I hope we can get more mods active at the same time in the future by adhering to this
