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When you extract a sprite, you can start a new match with that sprite equipped.
The sprite will start at level 1 each match you play but as you get elims, loot, etc, it will become stronger for that match.
Based on this string, it would appear that when you die, you'll lose the Sprite you had equipped except for starter sprites (Fire, Water, Grass).
If you have multiple of the same sprite you'll still be able to use the sprite you'll just have one less copy.
Sprite Variant Buffs:
Gummy: 10% More Sprite Dust upon Extraction
Galaxy: 20% more Ammo whenever picked up in the world
Gold: Bonus XP from eliminations
Battle Royale Sprites Menu:
The variants of Sprites will NOT unlock new sprites for The Guardian Skin, but will show up in your collection.
New sprites will be discoverable in 6 days.