what you are doing, is just change the color of your background - notice at the bottom of your preview screen, the first round button is red, same as the color you've chosen. You don't even need to get into materials to change its color - it's done right from that little button.

If you want your background to render, you must use the high res square prop, place and scale it at the back of your scene, apply any shader or image you wish on it and then it will render properly in any format.

Background node is just the background color and in my experience works much better as a neutral gray. For example, if you put short hair with transparency on your guy and render over black, white, grey and a red background.. you'll notice at the saved png that the grey gives the best and most neutral mask of the transparency than any other color.

Background node is NOT supposed to be rendered, it's the choice of color you wish to work on! :)

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