Short answers, pulled from the story.
In Japanese, chibi is a colloquial word for very short people and children. As an art-style term it is loaned from the English word character, and it describes a drawing style with exaggerated small, chubby proportions.
Chibi and super deformed, abbreviated SD, are two names for the same art style. Chibi comes from a Japanese colloquial term for short people, while super deformed derives from the French verb deformer, meaning to distort.
A standard anime character stands roughly seven to eight heads tall. In super deformed style, the head takes up between one third and one half of the character's total height, making the figure appear much shorter and rounder.
Chibi falls within the Japanese kawaii subculture because its exaggerated proportions, large eyes and round head on a tiny body, are designed to read as cute. This alignment makes the style widely used in advertising and merchandise both in Japan and internationally.
Chibiusa, a character from Sailor Moon, brought the term chibi to the attention of American fans in the mid-1990s. The name is a pet form of Chibi Usagi, meaning Little Rabbit, and refers to the daughter of Sailor Moon.
Teen Titans, Avatar: The Last Airbender, and Homestuck have all incorporated chibi-style sequences. These anime-influenced American series adopted the style for comedic or expressive moments.