In more detail
It is usually supplied at several sizes, such as 16 × 16, 32 × 32 and 48 × 48 packed into one ICO file, plus a 180 × 180 PNG "touch icon" used when a page is added to a phone's home screen. Modern browsers also accept an SVG favicon, which stays sharp at any size and can even switch colours for dark mode with a CSS media query. Pages declare icons with <link rel="icon"> tags in the HTML head.
Why it matters
Browsers request /favicon.ico from the site root even when no icon is declared, so a missing file fills server logs with 404 errors. Browsers also cache favicons aggressively, so a changed icon may not appear until the cache is cleared or the file name changes. At 16 pixels, detail disappears: a simple shape or a single letter reads better than a shrunken logo.
Example
An ICO file starts with a six-byte header, then one 16-byte entry per image. A file holding three sizes begins:
00 00 01 00 03 00 reserved, type 1 (icon), 3 images
10 10 ... first image: 16 × 16
A width or height byte of 00 means 256 pixels.