YUV is a special type of color representation, typically used in compressed formats like JPEG's and MPEG's. Colors in YUV space are composed of Luminance (Brightness, represented by Y) and Chrominance (Represented by a combination of U (Blueness) and V (Redness)).
An example of the UV color plane, with Y = 128
Each YUV texel is 16 bits, but similarly to 4 bit color formats, each texel actually represents two texels. This means that you can have up to 2048 texels in your original image (like other 16-Bit formats). YUV does not support alpha.
Nintendo did not want to support YUV, as its use is incredibly niche. It is, therefore, not really recommended to be used and should be swapped over to 16-Bit RGBA instead.