Pan/Crop works well if you want to keep a rectangular area.

If your area is more complex than just slicing off a straight section of the frame, you could use the cookie-cutter plugin (VF 2 only) and set up a shape to cover what you want removed.

For even more complex tasks you can use any photo editing software and draw solid colors or patterns wherever you want to block out areas of the frame, then save the image with the rest of the frame as a transparent background (PNG and GIF work well for this). Load this image to the overlay track. Wherever you have colors or patterns this will show on the final video. Wherever the background is transparent you'll see the video clip from the main track.