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. The monitor itself has not become dimmer: brightness is a different adjustment.

There are also two places transparency can matter. 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.