Alpha = opacity, which is the opposite of transparency.
100% alpha = 100% opacity = 0% transparency = fully visible.
0% alpha = 0% opacity = 100% transparency = fully invisible.
The Frame Alpha indicator is no different than any other indicator – it uses the value of the highest-priority, in-range, active status. If you have Death, AFK, and Offline all assigned to the Frame Alpha indicator, then your frame will use the alpha value of whichever status is currently displayed on the indicator. It's not blended between the values of all active statuses, any more than the Center Icon overlays a bunch of semitransparent icons when multiple statuses assigned to it are active.