Alpha Blend Mode

Is this the same as alpha compositing or something totally different?

Totally different.
http://en.wikipedia.org/wiki/Blend_modes

Totally different.
http://en.wikipedia.org/wiki/Blend_modes

I figured as much. By the way, that page contains zero information on the alpha blend mode.

There are examples on that page of alpha blend modes stencyl makes available. The first sentence is a perfect description of exactly what it is.

"Blend modes in digital image editing are used to determine how two Layers are blended into each other"

From AS3 docs (http://livedocs.adobe.com/flash/9.0/ActionScriptLangRefV3/):

"Applies the alpha value of each pixel of the display object to the background."

In other words, it doesn't actually draw but replaces the alpha channel of the destination image by the source's.