Before dealing with the question at length, it is necessary to elaborate on the literal and technical meanings of taqiyah and its significations. Taqiyah literally means to avoid a harm or an injury. Technically, it means expressing peace and reconciliation even if one may internally act against it.
Taqiyah is one of the subjects initiated by the Qur'an, confirmed by the traditions of the Prophet (S). It is a secondary rule and in harmony with the duty of duty-bound, even though it might be opposed to the principal rule. Taqiyah is in reality the practice of concealing one's true faith and it seeks to attain sacred goals including the following:
a) Protecting a believer's force and power from disintegrating or from getting terminated by the unjust and unmerited.
b) Protecting the ability of a believer's stamina and power for sensitive and crucial times.
c) Preserving secrets, programs and plans from getting into enemy's hand.
The Quran approves of Ammar Yasir's act of speaking apparently in favor of pagans to save himself even though he regretted his action later. A verse was then revealed praising him for what he actually did. Imam Baqir, peace be upon him, says: "Taqiyah is my religion and the religion of my forefathers: He who has no taqiyah has no faith"
Imam Sadiq (AS) says, "My father used to reiterate that nothing pleased him as much as taqiyah did because taqiyah is a believer's shield and a means for his protection."
Last but not least, taqiyah is a calculated tactic meant to protect human forces so as not to endanger believers in insignificant and trivial matters. Because no sound reason allows a minority group to make itself known openly and let it be crushed and destroyed by its enemy easily.  That is why taqiyah is used as a rational and logical method by a believer who is in the state of combat against his strong enemy.[1]
Based on what was just mentioned, the answer will be given as under:
1. Depending on various situations and occasions, taqiyah sometimes becomes obligatory, sometimes it becomes haram and other times it is simply allowable. Taqiyah becomes obligatory when one's life is at risk and it is haram when it may cause falsehood and evil to spread and people to go astray and injustice to be consolidated.
It happens sometimes in the history of religious, social and political struggle that if those who fight for truth embark on an open struggle, it is very much likely that both the combatants and their school will end up getting destroyed by enemy or at least they will be endangered. Imagine the situation faced by the partisans and followers of Imam Ali (AS) during the illegitimate government of Banu Umayyah. In that particular situation, the best and wisest policy for the followers of Ali (AS) was to protect the existing capacity and forces and not to waste them and that it was in their best interest to engage in an indirect and clandestine struggle. In reality, taqiyah for such a school and its followers in such a situation is considered to be a change in the form of struggle and combat which can help save them from destruction and allow them to achieve success. It is not known as to what those who reject taqiyah across the board, do in such situations? Which is better, getting destroyed or being in a position to carry the struggle in a logical manner. The second way is what we call taqiyah (quietism) and the first way is something no one can prescribe.[2]
Consider the example set by late Imam Khomeini. At a time when the country was ruled by an oppressive regime and the political situation was strangulating, late Imam Khomeini said that taqiyah was not necessary: "Sometimes, taqiyah is haram. That is when man sees that the religion of God is in danger. He cannot exercise taqiyah. That is when everything should go. Taqiyah is exercised in the branches of the religion. There is no taqiyah in the fundamentals of faith. Taqiyah is meant for protecting the religion. When the religion is in danger, there is no room for taqiyah, nor is there any room for silence."[3]
In a nutshell, taqiyah is observed when a religious or worldly interest is at stake. For this reason, when a more important cause or interest is at risk or when a bigger evil may be created, there is no need for taqiyah according to reason and religion.
2. Munafiq (hypocrite) is a religious hypocrite who outwardly practices Islam and shows himself as Muslim while inwardly concealing his disbelief[4] whereas in fact taqiyah is defined as the opposite of munafiq because one who observes taqiyah is a perfect believer. He believes in all the tenets of religion and it is for the same reason that he resorts to taqiyah and conceals what he believes inwardly simply to protect certain scared goals and interests.
3. When it comes to humiliation and degradation (which constitute another part of the question), we must say: Showing oneself as being oppressed and humiliated takes place at a time when the individual embarks on concealing his beliefs owing to fear or cowardice whereas taqiyah does not mean weakness, fear and conservatism. In fact, it is often used as an effective means to combat tyrants, oppressors and the unjust.
Finding out enemy's secrets, plans and plots would not be possible except through taqiyah method. No harm can be inflicted upon the enemy except through taqiyah and by way of hiding plans and combat strategies.[5]
Based on what was just said, we say that, firstly, taqiyah is not restricted to fear and bearing hardships. Secondly, if taqiyah is exercised due to fear, it is not necessarily on account of fear for one's own life; perhaps, it might be owing to fear for another person's life, honor and property. Sometimes, the entire religion of Islam might be at risk or under attack or one may fear disunity and discord among Muslims.  Indeed, sometimes a person might fear that his own reputation might be damaged or his life might be in danger or he fears that he might lose his property in which case, taqiyah too does not mean escaping torture or death which he might deserve because the principal rule is to protect one's life and not to jump into destruction[6] except in very important cases.[7]
4. Finally, about the limits of taqiyah and the issue enjoining good and forbidding evil, we shall quote Martyr Murteza Mutahhari who says:
"When it comes to enjoining good and forbidding evil, there is no doubt that one must use this way of promoting virtue with calculation, logic and good thought. Scholars, who have studied in social areas, have said that the secrets behind the extinction of the Kharijites was that they did not use logic in enjoining good and forbidding evil (of course, what they thought to be evil or good whereas in most cases their belief wasn't true). They did not subscribe to logic. They would go to unruly tyrant and unsheathe their swords knowing that their words had no impact on him but they would still go ahead. There and then the tyrant ruler would kill the one who enjoined him in an instant. The Kharijites did not make use of any tactics. There was no logic in their conducts. They embarked on doing something without thinking and using logic.
They believed that it was not necessary to use taqiyah as a tactic to enjoin good and forbid evil. We often resort to logic when we want to take action about something. We make use of our mind and think of the benefits and harm. If we realize that the benefit of something is more than its harm, we take action, otherwise we do not do it. The Kharijites did not subscribe to such things. They enjoined the good and forbade the evil, no matter what the consequences. The most important reason behind their extinction was that they did not avail themselves of logic in enjoining good and forbidding evil whereas in fact, they had to make use of logic."[8]

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