In more detail
Converting an image works by mapping each block of pixels to a character of matching darkness, such as @ for dark and . for light. Because a character cell is roughly twice as tall as it is wide, converters sample blocks about twice as tall as they are wide, or the picture comes out stretched. Banner generators instead draw words in large block letters built from characters such as #, _ and |.
Why it matters
ASCII art only lines up in a monospaced font. Pasted into an email, chat or document that uses a proportional font, or into a field that collapses repeated spaces, it falls apart. It is still common in code comments, terminal tools, README files and plain-text signatures, where images are not possible.
Example
A converter using the ten-character ramp @%#*+=-:. (dark to light) picks index brightness × 10 ÷ 256, rounded down: brightness 0 gives @, 128 gives = and 255 gives a space. A 400 × 300 image rendered 100 columns wide uses blocks 4 pixels wide and 8 pixels tall, giving 37 rows.