How to animate running fluid inside objects.

I would suggest creating multiple puppets, not everything on one page. Then position them near each other. So do a pipe, the cylinder, etc. separately. You don't have to, but it will get complex otherwise.

Note: this is why it is important to use logical nesting structure in the artwork file. It helps you remember "this section is the cyclinder, this is the horizontal pipe, this is the vertical pipe..." So introduce additional nesting levels to capture the structure well. It also helps with editing the artwork. You can hide or lock groups you are not working on at the moment, focusing on a subset while editing.

Back to your questions. Generally you should have a single top level group under which goes all layers. That should be +PuppetName. As you introduce additional layers, create a new group to go around the existing contents then put the other 4 layers inside +HydrolicCylinder, in the order you have them. That is perfect actually. Once you have done that, load the artwork into CH. Every time you significantly change the structure of the file, it will lose rigging. So its best to work out the structure early to avoid having to rework the puppet to correct things.

Ok, so I expect you will have something like

+Cylinder

. Main artwork with transparent area

. +Red layer

. Rear artwork

That is perfect. Select "Red Layer" and go to the menu and pick "Create Clipping Mask". It will still look out of bounds in Photoshop/Illustrator, but CH will automatically clip the red layer so it does not extend beyond "Rear Artwork". Done! Sorry, not sure of a video - but there is the User Guide (just search for "Clipping Mask"), oh and there is a section of my eye blog that talks about clipping masks that might be useful. https://extra-ordinary.tv/2018/04/21/debugging-character-animator-eyess/

Cycle layers - I am sure there are examples of it (try Google searches?) but the concept is pretty easy. Put a set of alternative images as children of a layer and call them 1, 2, 3, 4 (my suggestion). The parent group layer you add a "Cycle Layers" behavior. There are a number of settings, but "Start Immediately" is probably good for you. It just displays the children images one after the other - you have to be artistic to make it look good. E.g. the "+Red Layer" could be a group instead, which children under it. Can also add a Transform behavior as well, to make it move (like you did previously). That is, you can transform any group.

The user guide is not perfect, but it does go through various options: https://helpx.adobe.com/adobe-character-animator/using/behaviors-reference.html - scroll down to Cycle Layers for all the options possible.

Note: There is a concept of "Replays" that allows you to pre-record sequences. So if you need to do 3 things to make the Cylinder animation work, you can create a "Replay" and then trigger the Replay later when building the final scene.

There are two approaches that come to mind, but with the complexity of what you are after I am not sure which is going to work better. When you started talking about a squiggly path through a valve, that is starting to push things.

First, you will not be able to have a fluid "push" things. You will have to manually animate the thing you want pushed at the right time. There are "particles" where you can have a stream of little balls flow into a pipe, but I am not sure whether it will be too painful. I can imagine the balls getting stuck/congested near corners, or the performance degrading too much. It will be random in timing as well. So you can look up "particles" and physics ("collide") in the user guide, but I suspect it will be too frustrating in practice.

What I suggest instead is doing something similar to the rod, but with a solid color for the rod and using "clipping masks" in CH. You can have a pipe with two solid walls and put another rod like layer behind it with Transform behavior to position it. You can bend the pipe a bit I think (using draggers), but the original artwork would be a straight line.

Think of drawing your pipes and valves etc with paint on a clear sheet of perspex. You paint over *all* the perspex except inside the pipes. Then imagine having a big sheet of paper behind the perspex - top top half is white, the bottom half is blue. You then pull that sheet from the bottom upwards. The blue will go up the page from the bottom. That is what the effect would look like.

If you need a horizontal pipe, imagine getting a second piece of paper and pulling that one sideways for that section. So you have multiple bits of paper you pull behind upwards, sideways, in whatever direction you need. You time the pulling of them carefully so it looks like one smooth transition. ("Keyframing" in CH can help get the timing right.)

You can make it look a bit more fancy. CH supports "cycle layers" which allows you to draw several images and cycle between them like flipping through a series of images (old style single frame animation). Instead of using a solid blue (or red etc) color, you can have it cycling through with a bit of a pattern on the blue color.

To do a "good" job, you might use a combination, depending on how wiggly the lines are through the valve you mentioned. You can do a cycle layers drawing each step of the blue fluid sequence advancing through the value. You just draw it frame by frame. So long pipes might use the "pull a sheet of paper" approach, short funny paths you might need to draw a series of frames of by hand, then time all the sequences to match up and look like a single flow.

Does that sound acceptable? There is no "fluid" concept in CH that I would trust to do what you need. I mean you could try physics and particles, but I think you will come to grief personally. It will be close but not quite good enough.