I try to explain it a little.
The normalizing process of an mp3 file means: decompress it as .wav, find the maximum value in this file, calculate a normalization factor and multiply all values by this factor, then recompress it to mp3 again. If you follow up this process, you’ll find, there is no way back to the original file.
Using replay gain means: you analyze a file not only for the peak value, you using a 'volume over time function' to compute the average volume (that’s what your ears will adapt to). Since the output level is only a math function, you can manipulate it very easy (like you do be sliding the volume gain). You need to store only this one value with your file header. You don’t change the sound of the file. During playback (replay) it is fed into the bitstream by increasing or decreasing the volume by this value. A similar effect would be sliding the volume control by exact the same value up or down.
There is a standard about replay gain, and I hope, more and more manufacturer will fulfill this standard sooner or later.
You can put replay gain in and out. This should answer your next question: if it’s off, you hear the original cd, if it’s on you have the equalize effect (I hate to say normalize, because its something else)
Udo