If I wanted to make a visual novel without backgrounds or character sprites (text based, like a You Choose book where the reader has to use their imagination), would that still be considered an acceptable visual novel? And what are some tips for making a text based novel on Cloudnovel?

Well, there are reasons why the visual novel is called a VISUAL novel. At some point, it will still need some type of visual.

To me personally, reading a visual novel without visual is an unattractive offer. There are other apps that allow you to create 'Create Your Own Adventure' type of books where it is all text and no visuals which you can choose choices to get a different outcome/ending in the book. However, it is very much in a different format than a visual novel and it is NOT called a visual novel. I am not really sure what it is called...maybe interactive fiction or something?

There is a type of visual novel that has this, the screen usually has a solid background like a book or something and the text portion takes over most of the screen, you should use another engine for this though like Renpy...

like this or this...

I think it would be useful if you want to have a story that uses sounds or something like that since the engine would let you input that also.

Well what about a sound novel?