In a transparency knockout group,
the elements of a group do not show through each other.
Group with Knockout Group option deselected (left) compared to
selected (right)
In the Layers panel, target the group or layer
you want to turn into a knockout group.
In the Transparency panel, select Knockout Group. If
this option isn’t visible, select Show Options from the panel menu.
Selecting the Knockout Group option cycles it through three
states: on (check mark), off (no mark), and neutral (square with
a line through it). Use the neutral option when you want to group
artwork without interfering with the knockout behavior determined
by the enclosing layer or group. Use the off option when you want
to ensure that a layer or a group of transparent objects will never
knock each other out.