Apple Final Cut Pro X (10.1.2) - Manual (Page 373)

Chapter 11 Keying and compositing 373
Below is an example of a clip with an alpha channel, showing the image that fills the
alpha channel.
Below is the alpha channel image—the white areas define the video areas that are composited
over the background. The gray areas (which define the shadow in this example) define parts of
the image that are partially transparent.
This is what the final composite looks like over a background clip.
67% resize factor