This article is a stub. You can help by adding to it.
$blendtintbybasealpha is a VMT parameter that allows tinting of a mesh's material using the $basetexture's alpha channel as a mask to determine tint intensity (but not the tint's RGB color!) Applying an actual color RGB values is done elsewhere - either in-game or in Hammer with entities using the 'rendercolor' keyvalue. This technique is used in games like Left 4 Dead to allow for recoloring of the vehicle props, and in Team Fortress 2 for painting hats.
The tint mask simply controls the intensity of tinting. The more alpha, the more intense tinting is.
$blendtintcoloroverbase, a related parameter, controls the amount of color replacement versus tinting. (replacing the color per pixel entirely, versus adding more color to make the colors closer to the tint RGB color.) A value of '0' will be full tint while a value of '1.00' will replace the albedo in the mask area with the color defined with $color2.