they store the data in the dna, they encode pixels using ATGC, and re-sequence. But they only have one population of bacteria that contain all of the same data.
Most likely this is just "junk" DNA that has no physical manifestation.
As for reading the picture, it is only seen when they extract the DNA and use methods of sequencing to produce the image, meaning it will only show the little gif when analyzed the way it was designed for.