We are shown images of a head with information going in one side, and this eventually causes the head to erupt into a black mess. Lynch juxtaposes the most innocent of subjects (the alphabet), which usually marks the beginning of our schooling, with disconcerting images of blood and vomit. Disturbing? Yes. Lynch apparently formed the idea after hearing of a girl who was found reciting the alphabet during a nightmare.
On a more profound level, the film examines a fear that perhaps appears for most later in life: the dread of knowledge. There's quite a bit of truth to the oft-repeated line "ignorance is bliss." Gradually, we realize that the more we learn, the less we understand, and therefore, the less control we have over our situations. It's a problem that has vexed people since the conception of "science." We ask questions out of curiosity, find there are no accessible answers, create a religious penumbra that satisfies a great deal with a few simple passages, and then science comes along and we are confronted once again with the inconsistencies of our faith. Thus, we fear that which turns the rock-solid black and whites of our existence to a confused mass of gray.
Also, The Alphabet hints at what linguists and intellectuals and songwriters have known for centuries; words are wholly inadequate to describe even the simplest of human perceptions. And once one has etched that list of letters into one's mind, in a sense, there is no turning back. Life becomes shapes patterned on paper, and conceptions of reality will no longer be formed purely and internally; they are immediately attached to an imperfect language and remained tethered to that which will never truly suffice.