A good explanation of transparency in graphics files here:
https://en.m.wikipedia.org/wiki/Transparency_(graphic)
How does Andrew make an image with transparency? Mostly on my Android phone with Background Eraser by handyCloset. Free, not too many ads and easy to learn how.
They also make an app called PhotoLayers, I use that one a lot to assemble images. PhotoLayers has a few handy tools that the Imgflip Meme Generator lacks.