Yes, basically XWindows sites between Gnome and the hardware.

X is basically the API that all desktop environments (Gnome, KDE, XFCE, etc.) talk to in order to do things like "draw an application window on the screen". It's the standard that allows there to be so much diversity in DEs because they don't have to reinvent the low-level wheels every time. That's the usefullness: a standard API for doing 2D/3D desktop graphics stuff.

You'd be amazed how forward-thinking X was, even back in the late 1980's. It's worth remembering that X wasn't developed for Linux, it was developed for Unix and the myriad of commercial Unixes in the late 1980's/early 1990's was the main impetus for adopting it as a standard. It wasn't running on paltry x86 systems either, it was running on big fat Unix workstations and such, so it could do a lot of things that look or looked impossible on 386's and 486's.

X.org is a particular implementation of X (the reference implementation), specifically X11, which is FLOSS and has become the defacto standard for X in the age of Linux. It likely does many things that aren't specifically mentioned in the X11 specification, but since it's the go-to version, they're treated as if they exist. I don't know the specifics of Alpha channels but I imagine those are one of them.

X11 is not without its drawbacks though, and performance is one, which is why Wayland came into being. But Wayland is still rough around the edges and missing a lot of useful X11 features. It's reallllly tailored for GNOME as well, hence the concerns about other DEs disappearing.

I hope X.org continues to get maintenance from someone, but it's an uphill battle. It's a very complex, very old system with literal decades of feature creep and bloat on it, so it's not exactly easy to jump into.