Background color in dds files

[Quib]

DXT1 RGB has no alpha channel and so everything is 100% visible.

DXT1 ARGB is 1 bit alpha, meaning stuff can either be 100% transparent or not transparent.

DXT3 has explicit alpha and DXT5 has interpolated alpha. I don't know the difference between these, but both save the alpha channel (basically) on a per pixel basis.

I cannot figure out how everyone deals with alpha being part of the image, and how you can control how transparent things are without an alpha channel.

Quib