In short, an anorexic faggot dog.
Person 2: Yeah, I had one once, but I shot it, because it was just so damn ugly... I mainly did it to put the poor thing out of its misery though, ya'know?
Usually used as a Fursona, they generally tend to have human intelligence and personality, although they are pretty much always quadrupedal.
Most have a backstory, which is usually rather complicated. A commonly used backstory is that the creature is an escaped lab animal. A style of backstory which is often used to explain its less realistic traits.
Sparkledogs tend to be drawn in a fuzzy and long-legged style, they usually do not closely resemble real dogs and may have additions like human hairstyles, retractable claws or wings.
There are generally two kinds of sparkledog: one kind is usually black or dull tones, evil or emo and has lots of spiked or 'gothy' items and usually a hairstyle which covers one or both eyes.
The other kind is more colorful, often incorporating rainbow colors in their design and commonly of magical origins. Those tend to be rather happy-go-lucky.
The term is generally used in a derogatory sense, since sparkledogs are often seen as trying too hard to be original. It can be misspelled for effect. If the animal is not a wolf or dog it can either be called a sparkleanimal, or 'dog' can be replaced by whatever species it is.