if you are compositing 2 images together, and 1 has a transparent object, it is very difficult to have the background from 1 image show through the other, say like a drinking glass. With masking/alpha-channels the image of the drinking glass would have an extra piece of data describing how transparent the glass was, so it helps combining images. not all image formats support alpha channels though. JPGs BMPs and GIFs don't, but TIFs and PNGs do. Try looking for the dictionary that ClintH put up here @ R'Osity for some more info. :>