Background Image On/Off Background Colour
Two images are used in this display, one is the normal image and the second is the same image with an effect applied to it.
The effect image is used for the background of the main div while the normal image is used for the background of the second smaller div.
As the smaller div moves over the effect image its own background image is repositioned to give the effect that you are seeing a clear part of the effect image.
Both the images and the large div must be the same size.
My example also shows how you can use a background colour instead of an image