I'm not sure why that matters. Transparency is just a math operation I thought. You take the color of the image below and add the one you're drawing to it at a certain opacity. Am I missing something?
So let's say you have a background that has 16 colors. And you use a fog effect above it. Your fog uses 4 colors.
So actually, every color of your background might be aligned with one of the four colors of your fog, resulting in a different color each time. So you are already using 16 x 4 colors = 64 colors. That's the entire Genesis simultaneous color palette you are using.
And let me add that a single 8x8 sprite cannot use colors from different palettes at once. Which means that whenever you are drawing an 8x8 element (which is the base of everything, every sprite is composed of smaller sprite), you can only pick its colors among the 16 colors of the palette the sprite element is configured to use.
And finally, the first color of each palette is reserved for the transparent color (no color). So you really have only 15 colors at your disposal.
So achieving transparency in these conditions is extremely tricky. You can of course do things, but you will be limited. For example, you could decide to draw everything with only 5 colors (background, sprites), and add a fog effect fog that would be a gradient of 3 grays. Admitting that the fog covers the entire screen, then each color will actually be decided among the 3 possible colors, which will all be in your palette because you are based on 5 colors (5x3 = 15). But you are still working on 8x8 elements, and your fog should actually be a "per pixel" effect, which brings another problem to the table.
I am not a Genesis developer by the way, this is simply my understanding of the problems you would encounter trying to apply transparency on this system in a real game setting (background + sprites, not tech demo of logos and stuff).
The Genesis had a special mode that allowed some color effects to make things darker or brighter, allowing to go over the limit of 64 colors. With this effect (used in Vectorman), you could probably do a few things too, but my understanding is that it is also very limited. But theorically, this allows more colors available. You don't have to reserve all your 64 colors for your effect, as the other colors (darker and brighter) are somehow deduced at runtime or something like that. Again, not an expert on the topic.