IP masquerading is a technique of manipulating IP packets, which makes it possible for computers to "hide themselves" behind IP addresses that they don't actually own. I suppose that the most popular application of this is sharing an IP number between more than one computer.
Or in practice: Having a single ADSL (or cable) connection shared between several, possibly non-Linux computers. It turns out to be quite easy to get it working well. If you know what you're doing, that is.
The lecture deals with how Linux iptables works in general, and emphasizes the subject of masquerading (or NAT, to be accurate). The aim is to understand the mechanism of iptables, and how IP packets are going through it. Example commands for setting up both a firewall and IP masquerading are shown and discussed.
I also discuss how to fake the address of your ISP's DNS, so you can configure a static address on the local computers, even if the real address isn't static.
Even though the Linux versions have changed since the lecture was given (2003), the content is still relevant at 2008.