We use a particle tagging technique to dynamically populate the N-body Via Lactea II high-resolution simulation with stars. The method is calibrated using the observed luminosity function of Milky Way (MW) satellites and the concentration of their stellar populations, and self-consistently follows the accretion and disruption of progenitor dwarfs and the buildup of the stellar halo in a cosmological "live host." Simple prescriptions for assigning stellar populations to collisionless particles are able to reproduce many properties of the observed MW halo and its surviving dwarf satellites, like velocity dispersions, sizes, brightness profiles, metallicities, and spatial distribution. Our model predicts the existence of approximately 1850 subhalos harboring "extremely faint" satellites (with mass-to-light ratios >5 x 10(3)) lying beyond the Sloan Digital Sky Survey detection threshold. Of these, about 20 are "first galaxies," i.e., satellites that formed a stellar mass above 10 M-circle dot before redshift 9. The 10 most luminous satellites (L > 10(6) L-circle dot) in the simulation are hosted by subhalos with peak circular velocities today in the range V-max = 10-40 km s(-1) that have shed between 80% and 99% of their dark mass after being accreted at redshifts 1.7 < z < 4.6. The satellite maximum circular velocity V-max and stellar line-of-sight velocity dispersion sigma(los) today follow the relation V-max = 2.2 sigma(los). We apply a standard mass estimation algorithm based on Jeans modeling of the line-of-sight velocity dispersion profiles to the simulated dwarf spheroidals and test the accuracy of this technique. The inner (within 300 pc) mass-luminosity relation for currently detectable satellites is nearly flat in our model, in qualitative agreement with the "common mass scale" found in MW dwarfs. We do, however, predict a weak, but significant positive correlation for these objects: M-300 proportional to L-0.088 perpendicular to 0.024.