Displayed using Sixels or the Kitty protocol. Supported input formats are PNG, JPEG, BMP, GIF (stb_image), WebP (jebp) and SVG (nanosvg). Opt-in; edit the config to enable it.
Rendering images or movies on the TTY is common.
fbida: https://www.kraxel.org/blog/linux/fbida/
mpv: https://mpv.io/
Fbida sometimes need the -d option pointing to /dev/drm/something, when using screen or tmux.
MPV required for years -vo=drm on the TTY but since some months it always works. Nice improvement :)
A display server is not needed.