The Edit Pseudo Alpha filter creates an alpha channel for the image based on the image's first pixel (the upper-left corner pixel). All pixels that have the same color as this pixel become transparent.
Because only one pixel color becomes clear, edges of the opaque areas are aliased. The main use for this filter is when you want to composite a bitmap whose format does not have an alpha channel.
There is also a layer event called the Pseudo Alpha Compositor.
There are no setup options for this filter.