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I just tried this out, and it's exactly what I needed to make a smooth fade (given the color and resolutions limitations, haha)  This is perfect!  

Thank you so much for that tip!  I'll certainly dig into the manual and add this to my own quick notes.  I will put this to use!!!

Hi Sean, Sorry for the late response!  I will check notification settings.

By alpha I mean like a graphic alpha channel (transparency). In Pico-8 black is transparent. 

In my case, I'm making a particle explosion and using shift-e and shift-b in the function FILLP(E) or FILLP(B) (where it shows the dotted pattern in place of E and B, with the built in patterns; which use color 0 as an alpha, and my chosen color as the fill pattern.  

In your red/yellow example above, if the Red was color 0 (black), it would be transparent and you would only see yellow diagonal lines. Any circle filled with that pattern would show the yellow lines and what isn't yellow would show the game graphics under the fill where the color 0 is.  

I'm new to programming but I did a lot of graphic work, so I might not be explaining it well. I thought this would help me fade out a filled circle by changing through a series of patterns with less and less coverage.  That's what I'm doing now with the Shift-E and Shift-B, but I only get 2 steps of fade where I'd like about 5 or 7.

Again, I love this tool, I can't thank you enough for your contributions to the community!!! I appreciate it!

I am running Pico-8 0.2.5c and it appears the background and foreground colors are inversed. Additionally, I can't get alpha to work, or it might be that part isn't inversed?

Edited a few times as I discover more about this that might help you figure it out.

Most importantly, I have to say -  This is a very helpful tool!!!

I just got into PICO-8 last weekend. This is my first game purchased. I'm so utterly impressed.  I was a 3D guy on the Amiga in the 80's and it became my profession. In the 90's I loved Virtua Racing.  

Excellent work on this!!!

I realize you are dithering to compensate for lack of colors, but is it possible to have solid fill by pressing up and down together to toggle dither vs solid (of course we'd lose the shading).

Outstanding.  Seriously!