The Masquerade is an organized disinformation campaign heavily enforced by Kindred society (mainly the Camarilla), meant to convince humans that vampires and various other supernatural creatures do not exist. The Masquerade is the cornerstone survival strategy for Cainites; without it, the kine undoubtedly would rise up and exterminate all the undead.
The basics of the Masquerade are enforced through self-policing and harsh penalties. When a breach occurs, the methods of repairing may vary, but somebody is going to be punished — and while it would be nice for that somebody to be whoever caused the breach in the first place, Princes are known to prefer an early morning dusting over a long thorough search.
Generally, a breach consists of any evidence of vampiric powers: feeding on blood, obvious use of Disciplines, regeneration in plain sight and the like. Certain things (such as ghouls) are considered potential breaches all the time — although in this case, it’s assumed that the domitor will take necessary steps.
Camarilla vampires are taught to blend in and to cultivate their Humanity in order to make imitating living people easier. However, when something severe happens, the Camarilla usually calls on the Ventrue, who have made Masquerade-patching something of a science. The Ventrue will apply whatever resources are necessary — cash, judicious use of Dominate, machine guns — to make the problem go away.
While the Sabbat does not have a tradition of the Masquerade per se, it survives primarily through the Masquerade enforced by the Camarilla.