iMovie will automatically do a cross-fade of sorts. This is frequently not sufficient since many music clips have a long fade on their on. So you can control this yourself.
You can simply drag one audio track to the left so it falls under the other one.
I should say there are two ways to bring in background audio tracks.
1) Drag to background
2) Drag and drop on a video frame.
If you do option two, it will show as a bar below the video thumbnails. You can drag this bar to the left by clicking it in the interior and dragging to the left.
[Here is an old Tutorial that will show you how to drag this stuff around|http://www.apple.com/findouthow/movies/imovie08.html#audioclips]
