When an object has option Background->color, the specified color will normally be used as a background throughout the region defined by the object.
Style[expr, Background->color] specifies that color should be used as the background only for the region defined by the bounding box of expr.
In constructs such as Grid, Item can be used to specify that a background should fill the complete region for a particular item.
In a cell, the background is used only for the region inside any cell frame.
Background->None specifies that no background should be used, so that in effect the background is transparent.
Background->Automatic specifies a background that follows the system appearance for the particular object or window used. For Inset, Background->Automatic specifies that the background should be taken from the graphic in which it appears.
For objects such as Grid, Column and Row, the setting for Background can be a list that specifies backgrounds for individual columns, rows or elements.