Regarding VLANs, just think of it as a postal system:

1: you write a letter to someone in Moskow - this is your data 
2: you put the letter in an envelope - this is your Ethernet package
3: you send the letter which is then transported to the sorting center -
this is the wire between your computer and the switch
4: in the sorting center the letter is put in a bag that is labeled
Moscow - this your VLAN tag
5: the bag is transported to the airport, together with bags to other
destinations - this is the wire to the next switch
6: on the airport the bags are placed on the correct planes - you
shouldn't need that many switches, but this for story consistence
7: in Moscow the bag is opened - this is the removal of the VLAN tag
8: the letter is transported to the final destination - this is the wire
between the switch and the receiver
9: the receiver opens the envelope, reads the letter and writes a letter
back.


As for masquerading, this is a special case of NAT where the router
replaces the origin of the package with its own address (SNAT - Source
Network Address Translation). Yes if you cascade consumer type routers
this will cause this NAT process to occur just as many times as you have
routers stacked, but because every next router cannot see that the
package has previously been masqueraded already this will not cause any
issue. The main issue that you can have with NAT is usually related to
destination rewriting (DNAT) where the target machine is configured to
use a different router to send the reply (which in this type of NAT is
the original sender IP). This is something like you asking Bob who is
not wearing his hearing aid what time it is and Adam shouting from the
other room that it is 10PM which is probably not related because it is
broad daylight and annoyingly Bob is not responding so you still don't
know what time it is.


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