Aside from the fun factor of an image containing a runnable game/program, the PNG format is lossless, uses the same compression algorithm as ZIP, with encode/decode libraries in various languages. That makes it a good candidate for an application data format.
In a world full of SERIOUS BUSINESS ALL THE TIME it’s nice to see something decide to be fun for the sake of it. It’s a cool digital homage to cartridges, which are basically also rectangles with cool graphics on them that run a game.
Other wise those multiple save jpg artifacts could cause interesting bugs.
There's a whole subculture that embraces glitches in gaming, graphics, etc. Folks run around collecting screenshots and videos of these ephemeral artifacts. It's fairly complementary to speedrunning gaming culture.
It’s fun, mostly. Also, PNG has a handy alpha channel you can use to store data. I believe the previous console from this developer, PICO-8, started the trend.
I’m noticing a trend of newer indie software distributing assets in png files, what’s with that?