Entities can be transparent or have transparent parts.
Even segments are commposed of entities (x.files so the same applies).
An entity in whole or part is made as transparent via its texture.
Transparency requires 24 bit image plus an alpha channel for the transparent areas. The alpha channel which carries those parts of the image to be transparent will work as Pure Black RGB for 100% transparency so an RGB of 128,128,128 for example would giuve you a 50% transparency. FPSC transparency supports graduated tone transparency so your alpha channel can have any range of tones from black through grey tones to white for full graduated tone transparency effects.
As final images I personally prefer to use .dds files which work well for me.
There should be a lot more info available regarding transparency in FPSC imaging so do a search.
Hope that helps.
"I am and forever will be your friend"