IPSEC-S2S VPN-LAN requires MASQ in NAT

It does not require to have it. Most likely it could mitigate some issues ahead while not causing much trouble. Therefore plenty of Admins are doing this. 

The IP segment of IPsec VPN is something, which most admins are not propagating to there network. So if the firewall is not the default gateway, the traffic is not working. 

Got it little bit!

But can you explain with any example -- The IP segment of IPsec VPN is something

So you mean to say that if MASQ is not configured, return packet will not identify the gateway ....?

The Client needs to know, where your IPsec Network is. If the client interacts with the firewall as a default network, no NAT is required. If something else is the Default gateway, a SNAT is required. 

The Client needs to know, where your IPsec Network is. If the client interacts with the firewall as a default network, no NAT is required. If something else is the Default gateway, a SNAT is required.