Some of the options under "Settings>>Default Background Position" are self-explanatory, others like 'Align Top' are not.
So, lets say you have a background that is undersized and when you set if to fill, there is a feature at the bottom of the image that you want to show on the screen but it's cut off. Use the setting "Fill Bottom aligned" and now the bottom of the image is aligned at the bottom of your screen when it is filled. That feature at the bottom of the image you wanted to show now shows and more of the top of the image is cut off. As you can infer from this, the fill takes place starting at the top, middle, or bottom with these alignment settings.
FIT (stretches image vertically)
STRETCH (stretches image horizontally)
FILL TOP ALIGHNED
FILL BOTTOM ALIGNED
Hope this helps.