On a literal level, a mask is something that we hide behind. It changes our features on a surface level, but does not change who we really are.
In a masquerade, people wear masques and costumes. This is fun because you get to pretend you are someone else. The prince and his guests are pretending, all right. They are pretending that outside the walls the people are not dying of a terrible plague.
The masquerade is described as “voluptuous” (p. 4). The Prince’s tastes influence the other masqueraders.
[It] was his own guiding taste which had given character to the masqueraders. Be sure they were grotesque. There were much glare and glitter and piquancy and phantasm… (p. 5)
The masqueraders’ costumes are “delirious fancies such as the madman fashions” (p. 5), and they are described as beautiful, wanton, bizarre, terrible and disgusting. These adjectives describe the people themselves, so ironically their costumes betray their reality. Death finds them, even with their masques.