SNES Mode7 Graphics are a special format that the SNES uses ONLY while in Graphics Mode 7. This special mode of the SNES allows you to rotate, stretch, and otherwise manipulate Background Layer 1. However, this comes at a price. While in Mode 7, you may only have 2 layers: Layer 1, and the sprite layer.
Mode7 Format Graphics are always 8bpp, and take up half the VRAM space. The other half of the VRAM space is for the tilemap on layer one, and the two sections are interleaved.
More information can be found at the Wikipedia article.