I often use the "cookie" analogy to explain the recording process -
1. Recording/tracking: you get all of the right amount of your ingredients together and put them in a bowl
2. Mixing: you stir that shit up and spoon it onto a tray
3. Mastering: you bake your cookies until they are cookies
It is a bit of a different process when dealing with gameboys, but the concepts are essentially the same. I have used both methods- recording everything at once, and recording each channel seperate. Can't say really which method is "better," because depending on what is going on in your song one way might work better than another, or it may make no real difference.
So after you record your song, you have your finished "mix" which you would then take to "mastering." I don't spend any extra time or money in mastering gameboy music because it is so lo-fi anyway, but a good thing to do before you start burning CDs is look at the overall level of your track and see what you can do to make it as close to 0 dB (maximum) as you can get it (this is where knowledge of compressors and limiters come in handy).
A typical mastering chain will consist of EQ > compressor > limiter. It is important to note that they work in whatever order you put them in, and the limiter should always be the last item in the chain.