What's the difference between BackgroundImage and Image of a button?

BackgroundImage is like wallpaper, it covers the whole background.. you should use patterns or full pictures for the background. If you are just trying to show an icon use Button.Image

For the Button.Image property from MS documentation:

The Image displayed on the button control.

The BackgroundImage

An Image that represents the image to display in the background of the control.

So you can set a BackgoundImage as well as a Button.Image the Button.Image will be placed over top of the BackgroundImage

Note: Images with translucent or transparent colors are not supported by Windows Forms controls as background images. This property is not supported on child controls whose RightToLeftLayout property is true.

Here is an example I just created of a Button with both BackgroundImage and Button.Image set. Clearly there is a background image, then my button text and a button image next to my text.

The cool thing is you can change where you place your Button.Image with the ImageAlign property

Here's the same button using an icon with transparency and NOT using RTL and I set the background color to light blue and it all works fine. So either my icon with transparency really isn't transparent or the docs are wrong.

Background Image - The image as in the name suggests, gets set in the background and the text comes over it.

Image - The Image is adjacent(side-by side) to Text provided. (See in Image)