Tiny little playlist/library icons or artwork (not track art)

I want to add art work to my playlists (not track column)

i see that if you right click a playlist the option to add art work is there.

does this add a little icon next to the actual playlist and if so what format (png,jpeg?) and what pixel count.

this will aid in identifying playlists and brighten up the playlist area no end.

is there a tutorial? cant find anything on the matter.