Learn Swedish: Istället tog han av sig masken. - Instead, he took off the mask.

Because the sentence starts with the adverb Istället (Instead). Swedish strictly follows the V2 (verb-second) rule, meaning the finite verb (tog) must come in the second grammatical position. This forces the subject (han) to swap places and come right after the verb.

Why do we need the word sig here?

When you talk about putting on, taking off, or changing clothes and accessories on your own body, Swedish uses a reflexive phrasal verb. The base expression is ta av sig (to take off). Since the subject is han (he), the matching reflexive pronoun is sig.

Could the object (masken) go in the middle of the phrase, like 'he took the mask off'?

No. Unlike English, the parts of this Swedish phrasal verb stick together in a specific order: verb + particle + reflexive pronoun + object. Therefore, it must be tog av sig masken.

Is it spelled Istället as one word, or I stället as two?

Both are correct and widely used! The phrase originally comes from i stället (literally 'in the place'), but writing it together as the single adverb istället is very common and fully accepted in modern Swedish.