Alpha Channel
A layer that stores transparency information for compositing or rendering.
In practice
An alpha channel is an extra set of values, stored alongside red, green and blue, that records how opaque each pixel is, from fully solid to fully see-through. It lets a product photo sit on any background without a white box around it, and lets soft edges such as hair or smoke blend smoothly. A PNG logo with an alpha channel can go on a dark or light website header; a JPEG cannot, because that format has no transparency.
Often confused with Mask
A mask is an editable tool for hiding parts of a layer while you work; an alpha channel is transparency data stored inside the image file itself.
Try this
Export a logo with a transparent background as PNG and JPEG, place both on a dark background, and compare their edges.