2D Destructable Terrain / Lemmings / Worms... The easiest way?

I have done some research but I’m having a difficult time understanding

What would be the simplest way to make a sprite/object ‘rub out’ the terrain. I’m guessing from research you would use alpha channels?

For example,

One sprite player controlled with WSAD
Simple bitmap as the terrain that the player walks along with collision
Background with stars/sun/moon or whatever

The player walks/runs along the terrain and decides to dig like lemmings by pressing the mouse on them, or the worm walks along and you press it for the blowtorch

How would you put this into code?