No this is not what that option does. What it does is it it passes alpha: false to the WebGL context when it’s created which means that IF the camera clear color has alpha 0 then you see through the canvas. So if you want it to be transparent make sure you also set the alpha channel of the camera clear color to 0.
This looks like a bug because when I launch your scene I don’t see the project having the transparent canvas setting. It might be a race condition somewhere. One thing to try to see if it fixes it is turn transparent canvas off and on again and then launch again. Also if you publish do you see the same issue?
So actually the reason why transparent canvas is not working for you is because you have post effects on the camera. I think we disable blending with those post effects which is probably the reason why you don’t see transparency.
I think I’m gonna have to call in our graphics programmer here to help me out @Mr_F.
We’ve been looking at this recently and it seems that most of the post effects define color buffers with this format pc.PIXELFORMAT_R8_G8_B8 which means they don’t support alpha. If you change it to pc.PIXELFORMAT_R8_G8_B8_A8 it should work.