Premultiplied alpha is often used by some rendering engines such as video games for a number of reasons. A premultiplied alpha image has had its color channels (R,G,B) multiplied by the alpha/transparency value before saving. If a premultiplied image is viewed over a backdrop such as a checkerboard without allowing for this, the image may appear to have a fringe around the more transparent areas.
When thumb-nailing an image that is explicitly marked as premultiplied, the image is always treated as premultiplied regardless of this setting. An example file format that has explicit premultiplied flag support is PowerVR / PVR. When using QuickView however, the premultiply alpha setting is respected so you can compare differences.
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