Tor Project:FAQ claims the Tor network "will only know the destination". I don't understand this. At layer 3, the IP Src, and IP Dst are always shown in the IP Header. So why couldn't one of the Tor relays work out the source of the traffic? Does each relay NAT the traffic or something?
Does each relay NAT the traffic or something?
Something like that. Instead of NAT sessions, you have circuits.
From your client to the guard, from the guard to the next node, etc.. are all individual connections. So the source IP of the connection to each node is that of the previous node.
Also see this question: How does Tor hide IP address if IP is essential for routing