Data masking involves replacing original data with fictional, yet realistic, data to hide sensitive information. This technique helps protect data privacy and security by ensuring that only authorized users can access real data while masking the actual values from unauthorized individuals or systems.

Distributed processing frameworks like Apache Hadoop play a crucial role in handling large data sets by enabling parallel processing of data across multiple nodes. This allows for efficient data storage, processing, and analysis, leading to improved scalability and performance.

In this scenario, spike testing is the most relevant type of performance testing. Spike testing evaluates how the system performs when there is a sudden and significant increase in workload or traffic, which aligns with the expected surge in traffic during a holiday sale. It helps determine if the system can handle sudden spikes in user activity without crashing or significantly degrading performance. Thus, spike testing is crucial for ensuring the database's performance during peak times of activity.

Apache JMeter is widely recognized for its comprehensive testing capabilities, especially in load testing scenarios, making it a popular choice among database testers for evaluating database performance.

To ensure ETL jobs are executed at the right time and in the correct sequence for a data warehouse, it's advisable to implement job scheduling and orchestration tools. These tools provide features for defining dependencies between jobs, scheduling tasks at specific times, and managing job execution workflows. By leveraging such tools, testers can streamline ETL testing processes, improve efficiency, and maintain the integrity of data pipelines.

Data compression techniques in database systems primarily aim to reduce storage space and improve data transfer speed. By compressing data, the amount of disk space required to store large datasets is reduced, which can lead to cost savings and improved performance. Additionally, compressed data can be transmitted more quickly over networks, making data transfer more efficient.

Enforcing referential constraints ensures that relationships between tables are maintained, preventing actions that would compromise the consistency and integrity of the data. These constraints typically involve foreign keys linking records in different tables.

A test dashboard serves as a centralized platform that provides real-time updates on various testing metrics and key performance indicators. It offers stakeholders a visual representation of the testing progress, including test execution status, defect trends, and coverage metrics. By displaying critical information in an easy-to-understand format, a test dashboard enables stakeholders to quickly assess the health of the project and make data-driven decisions. It enhances communication and collaboration among team members and helps in identifying potential risks or bottlenecks early in the testing process.

Indexing plays a crucial role in enhancing the performance of data retrieval operations by enabling the database system to locate and access the required data more efficiently. It organizes the data in a structured format, reducing the time taken to search through large datasets. Thus, indexing contributes to better performance in terms of query execution speed and response time.

Key rotation is a crucial key management technique for ensuring the security of encrypted data in a database. It involves periodically changing encryption keys used to encrypt data, which helps mitigate the risk associated with compromised or outdated keys. By regularly rotating keys, organizations can enhance security and reduce the window of vulnerability to potential attacks. Proper key rotation strategies should balance security requirements with operational efficiency to ensure smooth functioning of the database system. Therefore, option 1 is the correct choice.