This is mostly an utility effect - it replaces/multiplies the original Alpha channel with/by either the Red, Green or Blue channel.
Channel - specifies which color channel is used 1 - Red, 2 - Green, 3 - Blue
Invert - inverts the channel values before replacement/merging 0 - invert, 1 - do not invert
Replace/Multiply - 1 - replaces the Alpha with the color channel 2 - multiplies the Alpha by the color channel
Invalid parameter values will cause the effect to not do anything.
Color premultiplication is only done if the channel is not inverted and replaces instead of multiplying over Alpha - otherwise, only the Alpha channel is affected resulting in an "additive" look for colors.
What's it good for? I personally use it combined with Erase/Mask to paste transparency into a Canvas.
Thanks go to tulamide for his support.