Masking is performed by discarding the masked out nucleotides. As a result the reference is split into separate sequences, which are positioned according to the original unmasked reference sequence.
Note that you should be careful that your data is indeed only sequenced from the target regions. If not, some of the reads that would have matched a masked-out region perfectly may be placed wrongly at another position with a less-perfect match and lead to wrong results for subsequent variant calling. For resequencing purposes, we recommend testing whether masking is appropriate by running the same data set through two rounds of read mapping and variant calling: one with masking and one without. At the end, comparing the results will reveal if any off-target sequences cause problems in the variant calling.
To mask a reference sequence, first click the Include or Exclude options, and second click the Browse () button to select a track to use for masking. If you have annotations on a sequence instead of a track, you can convert the annotation type to a track (see Converting data to tracks and back).