It's the very best documented engine you will find on this planet.
When you try yourself at game design, you usually know how to create an alpha channel.
Just google for "alpha channel gimp", you will get a free painting tool called GIMP and you will certainly find some tutorials.

I guess we're just going to have to agree to disagree on the documentation.
I already have photoshop and I know how to create an alpha channel in that. But you didn't mention I had to do this externally and just assumed I would know I needed to.
Anyway, sorry to have bothered you. I can see the sort of instruction I seek is not going to come from this forum as it seems to be oriented more to those who already have a background in game design. Although I have been using software such as Cinema 4d and photoshop for years, none of that prior experience is going to be much help to me either. Thank you for trying to help though, I appreciate your time

"I guess we're just going to have to agree to disagree on the documentation."
Prove me wrong.

"I already have photoshop and I know how to create an alpha channel in that."
Good.

"But you didn't mention I had to do this externally and just assumed I would know I needed to."
Why would you think that when I say edit the alpha channel?! And the comment
/// Supports an arbitrary number of 32 bit skins
/// RGB contains the tiled texture
/// Alpha contains the texture mask
emphasizes the way to go, think simple!

"I can see the sort of instruction I seek is not going to come from this forum as it seems to be oriented more to those who already have a background in game design."
Completely wrong, sorry. Don't be offended that easily.

I have no desire to prove you wrong or create confrontation over this. I merely gave my opinion on the documentation, based on my personal experience with the documentation of the other major software I use. So in the interest of peace and productive discussion, lets just go with it being an inadequacy on my part.
I wasn't offended, I was just concerned I was going to become a major pain in the arse. If you are willing, then I will continue.
Ok, lets start from the beginning, step by step....
A. Create a terrain heightmap in photoshop: Check
B. Import heightmap in to MED: Check
C. In MED, open skin manager: Check
take it from there.

D. New Skin => Texture => Import your first texture file (with alpha channel ). Close the settings dialog.
E. New Skin => Texture => Import your second texture file. Close the settings dialog.
F. Repeat for every texture.
G. Save your terrain.
H. Add in WED, attach action fx_terraintex. Save & build level.
I. You're done!

Awesome!
Ok, just a couple follow up questions. The textures I create externally. Should they be basic textures (a. grass b. rocks) that can be painted in pattern somehow in MED? Can I take the basic textures and paint them in WED using the material script? or do I need to paint the whole thing out in photoshop as I wish it to appear from an over head view, layer by layer for each corresponding type (rock, grass, etc) in a separate file?

Hi...
Here is all you need to know... LOL...
Actually... you can learn a great deal by looking at...
Here it is...
"MystyMood" by the "Loopix Project"
Here is the address to the web site:
http://www.loopix-project.com/
Click on the "Easy" button... and then "Mystymood" in the sentence...
There are 3 templates... Choose the right one for your code base...
I use their work on all my projects...
There is info and a great tutorial...
The texturing system is more advanced that the standard 3DGS system but it's awesome...
I suggest that you check it out... and then ask questions...
By the way... it's all free and usable in your project....
Best of luck!

wait. I think i get what you mean. the alpha channels provide for the placement of each material type.

Terrasame:
LOL! Ok, Im checking them out now.

Roock -n- Roll....
It's great stuff....