Alpha and transparency

Alpha tells you how opaque an image or window is when it is combined with something behind it. At zero, it is fully transparent. At one, it is fully opaque. Values in between let part of the background show through. Apple describes alpha compositing

In BetterDisplay, reducing the opacity of a supported stream window lets you see more of the desktop behind it. This does not dim the monitor itself. Brightness is a different adjustment.

A window can be partly transparent as a whole, while the image inside it can carry transparency of its own. Changing one does not necessarily change the other.

See Video Filters and Stream Transformations for the related settings.