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Paper 2D Components are used to add (or modify) 2D Sprites or Flipbooks as a sub-object to an Actor.
Paper Sprite Component
A PaperSpriteComponent handles rendering and collision for a single instance of a UPaperSprite asset. This Component is created when you drag a Sprite asset from the Content Browser into a Blueprint or contained inside the Actor created when you drag one into a level.
An example of using this type of Component may come in the form of Sprite assets used to construct a level, for instance ledges or platforms, ladders, ramps etc. Placing those Sprite assets in your level creates a PaperSpriteActor that uses an instanced PaperSpriteComponent (or unique copy) of the selected Sprite asset.
For information on creating Sprites in Unreal Engine 4, see the Creating Sprites documentation.
Paper Flipbook Component
The PaperFlipbookComponent in short, is a wrapper for a SourceFlipbook (which is a series of Sprites played sequentially to create a 2D animation). When creating a Paper2DCharacter , this component type is automatically added which allows you to create playable, animated 2D characters.
PaperFlipbookComponents can be posed arbitrarily in 3D, attached to other Components, or have other Components attached to them. Each instance can specify a custom color that will be passed down to the Flipbook Material as a Vertex Color. They can also have a custom material specified that will override the default Material defined in the SourceFlipbook.
Through script you can change the current SourceFlipbook asset by calling the SetFlipbook function, but note that this will only work if the Mobility property is set to Moveable (or if it is called during the construction of the Actor). You can also control play rate, play direction, looping, etc, with various other methods on the Component.
For information on setting up and working with Flipbook Components, see the Flipbook Components documentation.