The alpha channel is the transparency component in a color description, e.g. of a pixel. You use this to describe the transparency of smoke, etc. Alpha blending is the process of determining the final color of a pixel on screen by mixing all the colors of overlapping pixels according to their alpha values. If I am not mistaken, the performance of this step is mostly limited by the GPU's pixel fillrate. (I am a computer scientist, but not in the field of computer graphics, so I am an easy victim to the Dunning-Kruger effect, but I think this explanation is mostly correct.)