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I understand that one of the ways in which a VPN can be implemented is via L2TP over IPSEC. What does this mean exactly? I know that IPSEC is a network layer protocol. On the other hand L2TP is a data link layer protocol.

Does L2TP over IPSEC then encrypt the data twice (at the network layer and the data link layer?)

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No, L2TP over IPSEC only encrypts once, the encryption is done by IPSEC. It is used when you wish to encrypt your data link layer. IPSEC will handle IP packets. Your data link layer is converted into L2TP IP packets, with no encryption. Then you encapsulate the L2TP in the IPSEC protocol.

If you don't need to transport your data link layer over IPSEC but only your IP layer, then you don't need L2TP since IPSEC can handle the IP packets.

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