oh, yeah i see the confusion. as carlos says the mask image is being continuously looked at by PI. if you change the mask image (the luminance image you dragged to the tab of the target) then the mask on the target image automatically changes. if for instance you take the mask image and make it incredibly bright (say, with HistogramTransformation, dragging the midtones slider all the way to the left), you'll notice that the red in the masked image completely obscures the image underneath. likewise if you make the mask image really dim, the red will hardly show up. the red thing over the masked image is simply there to give you some visual idea of how strong or weak the mask is.
rob