Pretty clear to me he's running DNS over the VPN, and so yes, 'ISP' referred to 'his immediately upstream ISP', and so yes, OP is "creating a chain of recursor

Pretty clear to me he's running DNS over the VPN, and so yes, 'ISP' referred to 'his immediately upstream ISP', and so yes, OP is "creating a chain of recursors (that you control?) to make tracing the requests more difficult" but also, as a result less difficult to tamper with by a less trusted party such as a mass market commercial ISP - tampering with his forwarder would entail either tampering with random many other peoples traffic or compromising the 'percieved as more secure' ISP. Pretty sure someone mucking around with TTL's on these packets to make sure they don't get too far out of intended range and the numerous other things would be aware of these issues..