What a data URI contains
A data URI packs the MIME type and the Base64 payload into a single string beginning with data:. Because the image is embedded in the markup, the browser does not make a separate request for it.
When embedding is worth it
Small assets benefit: an icon of a few hundred bytes saves a round trip and appears instantly. Larger images do not. Embedded data cannot be cached separately from the page, so a big data URI is re-downloaded with every HTML response and blocks the page from rendering for longer. A practical cut-off is a few kilobytes.
Usage examples
In HTML: <img src="data:image/png;base64,...">. In CSS: background-image: url("data:image/png;base64,..."). For SVG, embedding the markup directly is usually smaller than Base64.