Step 1: Downloading the applications.
When a computer connects to a wireless network it usually obtains an IP through a DHCP server, which is basically just a method of providing dynamic IPs so that everyone does not have to sit down and figure out what IP everyone else is using and then manually set one on their own machine. When a request is made to a DHCP server two pieces of information are recorded, your MAC address and your hostname. What MadMACs does is randomize both of these for you automatically every time you boot, or every time you manually tell the software to do so.
Once your computer is connected to the network, randomized or not, most of the traffic leaving your PC is in the clear. So any network admin, or *nix user with free software can eavesdrop on everything you do. TOR solves this problem through a suite of applications that anonymize your connection point and encrypt all your traffic.
So with both pieces of software installed you have hidden your identity from the network, and made all of your traffic unreadable by anyone else on the network you have chosen to connect to.
(Sorry, no how madmacs works, but then its pretty self explanatory)