A lot of people is still in doubt about the pattern effects of Picture to People site. In fact, it's very simple to use, as everything there.
It's a generalization of the engine that makes the text effects. For Picture to People a "pattern" is a black shape in a white background, no matter how it looks like. You upload your image (pattern) and it will be a guide (a "directional field" in a math sense) when rendering the effect you have chosen.
Picture to people site will no refuse a non black and white image when doing a pattern effect; in this case, the input image will be made black and white internally. Beside this, usually your pattern doesn't need have a good resolution or be free of jagging. A lot of effects are immune to these problems and can accept very low quality patterns.
If you use the "closure" option, the renderizer will be cloistered by your pattern shape. In this case, you can choose freely the background color you want.
Above you see a pattern in very poor quality. After you see the result of applying an effect without closure and finally you see the same effect using closure with a soft purple as background.