WIP means "work in progress".
It has nothing to do with the differences between models and skins.
This depends entirely on the model in question.
A model with simple animations can be smaller than its texture.
Wrong.
You can just alpha out the sword in the texture.
Kitabatake is correct.
An alpha is basically the transparancy of a image file.
If the alpha is 255 this means that the image is non transparent.
If the alpha is 0 the image is transparent.
Look at the number 255, it's the same amount being used for RGB (Red, Green, Blue) values. Hence you see RGBA every now and then in image editing applications.
This works for any image file extension that supports alpha information (RGBA). BLP is one of those many file extensions. So is PNG and GIF.
Setting alpha values is commonly supported by many image editing applications such as: Photoshop (payed),
Gimp (free),
Paint.NET (free) and many others. (No, windows paint doesn't support alpha's unfortunately ;P)
Remember that alpha values can be changed on the canvas of your image allowing you to "alpha out" specific parts of the image.
Now for those who didn't know about alpha's: Imagine the possibility's if any blp can have an alpha value.
Some examples: transparent multiboards, textures, tiles, you name it.
(I advice people to look through the warcraft MPQ's using an MPQ editor to find interesting paths for blp files they can import to)
Here is a
MPQ editor
(MPQ's can be found in your installation folder of warcraft III, they are named: war3.mpq and war3x.mpq where x contains the data used for the frozen throne.
The path to import to is the folder hierarchy of the MPQ. Have fun exploring...)
Can't view the extracted resources from the MPQ? Try
http://www.hiveworkshop.com/forums/tools-560/warcraft-iii-viewer-62878/ (Also useful for when you want to convert files to BLP format)