In the first layer—the application layer—the Tor browser encrypts communication, including the destination IP address, several times. This essentially masks the user’s IP address.
The traffic then passes through a virtual circuit (the second layer), which is made up of several Tor relays that encrypts the communication even more.
By the time you pass through the third layer (final relay), your IP address would have been changed so that you appear to be originating from a different physical location. Users can confirm this by getting on Google and see if it greets them in a different language.