Appearance genes control which sprites are used for a creature's body parts. When you think of a norn 'she's got her mother's eyes', this is the type of gene that controls that inheritance. There is one gene for each body part, from head to tail tip of the creature - head, body, legs, arms are in all the games, and tail is a new option from Creatures 2 onwards. The body part can be specified from a selection of breed slots - 0-9 in C1, and A to Z in C2 and beyond. Creatures may use the appearance of another species of creature - for example grenorns. Appearance genes do not control the colouration of a creature, the pigment genes do that. Facial expression genes control which expressions Creatures use for which drives.
Common edits for the appearance genes can be to make them sex-specific, as in the Yin Yang Norns, which use different breed slots for males and females.
If it is specified in the genome to use a sprite that you do not own, the game engine will use the sprites of the previous breed slot instead.