The alpha channel allows partial transparency. It will allow the various colors to blend into their backgrounds, but it will also allow Internet Explorer 7 and other applications to read partial transparency The alpha channel isn’t used in every single application, so this is a sketchy way to see partial transparency. (It should also be noted that “transparency” is a word that many disagree on; some use it to mean that you can see through, while others use it to mean the color is less opaque than a solid color.)
Masking color control, on the other hand, is a tool in photoshop-like programs that allows you to place a color over another without losing the original color. It’s almost like a cut and paste that allows you to keep the original layer and go back to it if you need to.