How can transparency be achieved when merging or overlaying images in PHP?

When merging or overlaying images in PHP, transparency can be achieved by using the `imagecopymerge()` function along with setting the alpha blending mode using `imagesavealpha()` and `imagealphablending()` functions. This allows for the images to be merged with transparency levels preserved.

// Load the images
$image1 = imagecreatefrompng('image1.png');
$image2 = imagecreatefrompng('image2.png');

// Enable alpha blending on the images
imagesavealpha($image1, true);
imagealphablending($image1, true);
imagesavealpha($image2, true);
imagealphablending($image2, true);

// Merge the images with transparency
imagecopymerge($image1, $image2, 0, 0, 0, 0, imagesx($image2), imagesy($image2), 50);

// Output the merged image
header('Content-Type: image/png');
imagepng($image1);

// Free up memory
imagedestroy($image1);
imagedestroy($image2);