Tor works pretty much like this:

You -> Relay 1 -> Relay 2 -> Relay 3 -> The website

Each arrow is an encrypted connection. The content of the exchange on a single arrow is the address of the next hop and the query of the next hop. Thanks to this:

- Relay 1 only knows you're going through Relay 2

- Relay 2 doesn't know who's asking (you) but knows it passed through Relay 1 and is going through Relay 3

- Relay 3 doesn't know who's asking (you) and where you entered, but knows it's going to the website

The nodes in the middle know everything that goes through them, but don't have the big picture.

The entry IP address is the IP address of Relay 1. Your computer must know an address to connect to, and that address is distributed in listings by the Tor Project. Since this listing is public, it also makes it easier for censors to censor, or at least detect who's interested in connecting through Tor