What is the term used to describes altering the pixel colors where the edges of the object and the background meet, so that the object appears to merge with the background?

The term is Alpha blending. Alpha blending is utilized to show an alpha bitmap, which is a bitmap that has straightforward or semi-straightforward pixels. Notwithstanding a red, green, and blue shading channel, every pixel in an alpha bitmap has a straightforwardness segment known as its alpha channel.