An alpha channel in an image file contains transparency information to tell the program which part of an image should be opaque, such as a logo, and what should be discarded (or keyed out)so that the video layers below can be seen, such as the green in a greenscreen shot. An alpha channel is based on luminance and if you looked at it by itself it would be a black and white image usually with white areas showing 100% opacity, and black showing transparent areas. Areas of grey would represent varying degrees of opacity. The alpha channel of a logo to be keyed over a background would appear as a white shilouette of the logo shape surrounded by black. If it had a drop shadow that would appear as a fuzzy grey area around the logo shape.
The alpha import settings in the avid are used when you are importing a still or video file that has alpha information created by the application used to generate the image such as a logo from photoshop or an animated logo or greenscreen key from after effects. These settings are telling the avid to 1. look for alpha info, and 2. how to use it. The avid is unusual in that it interprets alpha info the opposite of every other application. It sees black as opaque and white as transparent. Therefore, it is necessary to check the “invert alpha” option when importing anything that is created by another application and/or not rendered using an avid codec. Once imported, the file with your “fill”, ie. a logo, is placed on V2 and the background placed on V1 to complete the composite.