(short answer): PNG files are what we require because PNGs preserve transparency within files.

(more detailed answer):

Saving a file as a PNG preserves a transparent background.

Note that saving any file as a jpeg will, by default, add a white background to that file. White backgrounds can be problematic for Direct To Garment (DTG) prints.

For example, the same art file can be used for several printing methods-- if a jpeg file is mocked up on both a grey t-shirt for DTG printing & a white mug for sublimation printing, a rectangular white background will appear (and print) overlayed on the t-shirt surrounding the design via DTG printing. The sublimation process does not utilize white ink while the DTG process does use white ink.

*Note: PNG files can only be saved in RGB; please prepare your PNG files at 8 bit/channel.