The Sparrows are a religious movement that arose within the ranks of the Faith of the Seven. It is mostly composed of the lowest and humblest of the Holy Faith, and was formed in response to the suffering inflicted on the smallfolk of Westeros during the War of the Five Kings.
Queen Cersei Lannister makes the High Sparrow the new High Septon, in an attempt to build a new alliance between the Crown and the Faith. She also shockingly gives the High Sparrow permission to reform the Faith Militant, the military order of the Faith of the Seven. Subsequently, the Sparrows make up the bulk of the renewed Faith Militant's numbers.
The Sparrows gradually formed during the early years of the War of the Five Kings, as a popular disgust movement by members of the Faith of the Seven, outraged at the suffering being inflicted on the commoners, and particularly the wanton attacks on members of the clergy when entire villages and towns were ravaged in the war.
According to Kevan Lannister, the Sparrows only started to appear in King's Landing after Tywin Lannister was killed. Before that, Tywin had made sure that his soldiers would keep the more troublesome refugees out of the capital city. After Tywin dies, however, the Sparrows openly and frequently appear in King's Landing.
Ser Kevan Lannister reveals to Queen Cersei Lannister that his son, Lancel, has joined the Sparrows. As a sign of his newfound piety, Lancel has taken to wear humble clothes, no shoes, and cut his golden hair short.
A group of Sparrows led by Lancel Lannister break into Littlefinger's brothel, where it turns out that the High Septon is secretly a regular customer. Right in the middle of an encounter between the High Septon and several prostitutes (in which the whores role-play by dressing up as the Seven), Lancel and the other Sparrows burst into the room. They beat Olyvar and scare the whores away while Lancel confronts the angered High Septon and accuses him of profaning the Faith (through so flagrantly violating his sworn vows of chastity). The Sparrows strip the High Septon of his clothing and parade him naked through the streets, striking him with a stick whenever he tries to cover his genitals with his hands.
The High Septon complains to the Small Council, but they scoff at his corruption. Queen Cersei Lannister decides to visit the leader of the Sparrows in the city, the so-called "High Sparrow", in Flea Bottom. She is surprised to find that he is a humble monk, dressed in rough-spun robes and barefoot, personally serving out bread and soup to the poor. He is mildly worried that Cersei has come to arrest him, but instead she reveals that she had the High Septon arrested, as his corruption was a public embarrassment. Instead, Cersei says that due to the still perilous state of the realm from the war, she wants to make sure that the Crown and Faith work together as allies to strengthen public order (not coincidentally, public order under the rule of her own son).
Cersei makes the High Sparrow the new High Septon and creates an alliance with them to counter the growing influence of the Tyrells over the court. She then arms the Sparrows into the Faith Militant to dispense the Seven's justice over the city. They attack taverns, brothels and vendors selling idols of other gods, all of which they see as crimes against the Seven. They then arrest Ser Loras Tyrell for his sexual relationships with other men, as well as Margaery Tyrell for lying under oath during her brother's trial.
Not all the Sparrows join the Faith Militant, however. Several Sparrows are gathered before the Great Sept of Baelor when the High Sparrow addresses the people of King's Landing to announce that Cersei has confessed her sins and is about to undergo a walk of atonement.
When the Sparrows ransack Littlefinger's brothel, they have singled out and assault a homosexual male client and one of the male prostitutes he was having sex with. They hurdled homophobic slurs towards them and stated that "There's a special place in the Seven Hells for your kind." One of the Sparrows approached the homosexual male client with a knife and off camera he screams. (it was implied heavily that he was castrated) Later, Loras Tyrell is arrested by the Sparrows for buggery. Brother Lancel told Loras during his arrest that Loras had "broken the laws of Gods and men."
When Loras and Margaery Tyrell are imprisoned by the Faith Militant, their grandmother Olenna comes to the Great Sept of Baelor to demand that the High Sparrow release them. He bluntly tells her that he serves the gods, and the gods demand justice. Olenna sarcastically asks how the gods communicate their will to him, by horse or messenger-raven, but the High Sparrow simply responds that it is through their holy text, The Seven-Pointed Star, and reminds her of the sections of the text prohibiting "buggery and perjury". During his holy inquest by the Faith, a somewhat disheveled Loras is asked how he answers to the buggery allegations. Loras of course denies he was ever Renly's lover, and assures the High Sparrow they were merely best friends, Margaery, when asked to testify backs her brother up. The High Sparrow then calls forth a surprise witness to Loras's horror: Olyvar, who on Cersei's instructions quickly exposes the lies of both Tyrell siblings. Loras attempts to attack Olyvar but is restrained.
During the trial of Loras Tyrell and Cersei Lannister, the Sparrows bring Ser Loras in first, as the High Sparrow awaits. Instead of having a trial, Loras confesses to his crimes and tells the High Sparrow that he wishes to devote his life to the Faith. The High Sparrow tells him that this would mean that he renounces his family name and his future lordship of Highgarden, but Loras tearfully agrees, and the sparrows carve a seven-pointed star into his forehead. Margaery and Mace are unhappy with the High Sparrow for mutilating Loras, and the High Sparrow says he only promised to allow him to leave after Cersei faces her trial.
In the books
In the A Song of Ice and Fire novels, the Sparrows are so named because, just as the sparrow is the humblest of birds, they are the humblest of men. They are a popular disgust movement that arose among the commoners of the Seven Kingdoms in reaction to all of the suffering caused by the War of the Five Kings and the Lannisters' indifference to it - particularly to the despoiling of septs and septries, as well as the attacks and rapes on men and women sworn to the Faith. They march to the capital carrying with them the bones of the holy men and women killed in the course of the War of the Five Kings to lay them before the King and demand his protection.
In the novels, the religious protest movement known as the Sparrows were gradually introduced in preceding books - not necessarily called "the Sparrows", but precursors such as mounting widespread anger and disgust at the suffering of the commoners caused by the war the Lannisters started. Much of Arya and Brienne's storylines involved their wanderings through the Riverlands, witnessing the vast devastation inflicted upon the region - but most of these were omitted for time in the TV series. More discontent was also seen among the poor masses of King's Landing - though at least part of that was shown, such in Season 2's "The Ghost of Harrenhal" when Tyrion and Bronn see a street preacher declaring to an angry mob that Joffrey is a rotten king, a product of incest, and the high lords have forgotten the gods. This also culminated later during Season 2 in the Riot of King's Landing. These subplots, however, were condensed for the TV series, so the Sparrows suddenly appear in the Season 5 premiere, "The Wars to Come". Kevan, however, offers the explanation in that same episode that the Sparrows were active in the countryside for some time, just "off-screen", and that they simply haven't been seen in King's Landing before that point because they were wary of directly confronting Tywin Lannister while he was alive.
Lancel Lannister does not specifically join the Sparrows, though he does become associated with them. After nearly dying from the infected wound he took at the Battle of the Blackwater, Lancel becomes a fanatically pious man, despite his marriage to Amerei Frey and being given the lands of the newly extinct House Darry. Lancel later abandons his wife and renounces his claim to any lands to join the Warrior's Sons, one of the two orders that make up the Faith Militant. The TV version simply condensed this to make him one of the Sparrows, and then soon initiated into the Faith Militant.
In Season 6 of the TV series, Cersei Lannister wiped out most of the Sparrows in King's Landing including the High Sparrow himself in the Destruction of the Great Sept of Baelor. While certainly a major blow against them, it isn't clear if they could be totally destroyed in one event like this in future novels. The five current novels make it a point that the Sparrows have spread over all of southern Westeros, and while many of them do descend upon King's Landing there are still many scattered across other parts of the realm. Multiple characters observe groups of them in the Riverlands, for example, tending to refugees. Killing off so many in the Great Sept may indeed remove their presence from King's Landing, and an event so large as the destruction of the Great Sept will probably happen in the next book, but killing all the Sparrows and essentially destroying the largest cathedral in Westeros might lead remaining religious leaders across the continent to utterly turn against Cersei - the outcome will only be revealed by the next novel.
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