When work item query is acknowledged, CatLight marks all work items as read and remembers their state. If you use "show changes" mode, the app will hide all acknowledged work items. If you use "show all" mode, they will no longer be bold.
When work item changes in TFS, it will be marked as new and it will re-appear on the dashboard.
Work item is acknowledged automatically when you click on it.
When all work items are acknowledged, and there are no more alerts, tray icon will change from a solid cat to an outline.
All those changes happen in the app only, and nothing is modified in TFS / VSTS.