The objective of the usage of smaller palettes via CLUTs is to lower the number of bits per pixel by reducing the set of possible colors that are to be handled at once (often using adaptive methods).
[1] The normal human eye has sensibility to the three primary colors in different degrees: the more to the green, the less to the blue.
So RGB arrangements can take advantage of this by assigning more levels for the green component and fewer to the blue.
Then, when loading the mosaic of image thumbnails (or other heterogeneous images), the program simply maps every original indexed color pixel to its most approximated in the master palette (after dumping this into the hardware color registers), and writes the result in the video buffer.
This technique is used for pointers, in typical 2-D videogames for characters, bullets and so on (the sprites), video titling and other image mixing applications.
Some early computers, as Commodore 64, MSX and Amiga supports sprites and/or full screen video overlay by hardware.
By contrast, PNG supports alpha channels in palette entries, enabling semi-transparency in paletted images.
When dealing with truecolor images, some video mixing equipment can employ the RGB triplet (0,0,0) (no red, no green, no blue: the darkest shade of black, sometimes referred as superblack in this context) as the transparent color.
The same way, typical desktop publishing software can assume pure white, RGB triplet (255,255,255) from photos and illustrations to be excluded in order to let the text paragraphs to invade the image's bounding box for irregular text arrangement around the image's subjects.
Although related (due to they are used for the same purposes), image bit masks and alpha channels are techniques which do not involve the use of palettes nor transparent color at all, but off-image added extra binary data layers.
Microsoft Windows applications manage the palette of 4-bit or 8-bit indexed color display devices through specialized functions of the Win32 API.
It is supposed that every graphic element that the application tries to show on screen employs the colors of its logical palette.