DigitalOcean’s guides in general are pretty good for all sorts of things, whether it’s a generic discussion of a concept like the ones you’ve posted, or a step-by-step guide for installing and configuring specific systems or software. Even if you’re not using DO as a host, much of what they suggest is still very useful.
Yes, I think that ‘masquerading’ is the key bit to grasp. The MITM Proxy isn’t just intercepting the traffic, it alters the traffic as it passes through.