On the Output Settings tab:
Drag the Width slider to set the area of the image that is to be faded into the background.
Generally, use a lower setting for small images, or those with intricate edges; use a higher setting for large images, or those with cleaner edges.
Drag the Blur slider to set the degree to which the faded edge is blended.
Lower values will produce results that more closely resemble the original image; larger values may be more aesthetically pleasing.
You can also use the touch-up tools for additional refinements: