With the use of key framing the object can be moved around the screen while the MDE object, with it's alpha transparency channel allows the "UFO" to superimpose over the live footage background.
You can use a ufo image on a green background to do a similar effect too. However with the MDE, it has a fluid and gradient edge that smooths out the image making the "UFO" look better. You can play with this idea and have the UFO fly around the screen, flip and rotate or do anything you want. Explore and have fun!
If you are interested in alpha elements, check out the selection of MDE's at digital juice. Other companies make similar objects as well.