Well, if you make more than one alpha channel (not supported in .tga by the way) and turn them all on you'll see differest shades red as each one intersects the other.
Think of the red you see when you turn on the alpha channel as an "onion skin" or a red transparancy (like those used in overhead projectors) that gets overlaid on top of the image. You can still see the image below it. But, if you zoom in and look real closely the gradient should still be there.
It's a way to view the selection represented by the alpha channel overlaid on top your image as a guide, while still allowing you to work on your image. Like you, I mostly find it confusing, and so rarely use it.