An alpha (channal) referes to the black and white image in a skin that tells the model what should and should not be shown. This is commonly used in foliage and in the feathers and quills of animals. In foliage the alpha is edited to the skin of the leaves or branches is shown but the backround is not. In some cases editing an alpha can replace meshing, but this not practiced often because of its limitations.
How to Mod It
Most .dds plug ins have an option that allows you to edit it. Such as in this picture, the alpha is circled in the program DXTBmp. To edit an alpha simple double click on it in DXTBmp. In order for an alpha to work properly it must corrispond with the skin. To save after editing the Reload After Edit Button under the Image Tab. You can also hit the button that looks like a image with an up arrow.