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The effect of "Level Limit – Area B" does not use the chain, it is a continuous effect.
Monsters can still be Summoned in Attack Position.
All Level 4 or higher monsters face-up on the field after "Level Limit – Area B" resolves will be in Defense Position. You can change the Battle Position of a Level 4 or higher monster, but it will immediately be changed back to Defense Position because of "Level Limit – Area B"'s effect.
Monsters can still change their Battle Positions. They just switch back to Defense immediately.
If "Level Limit – Area B" is activated while "Final Attack Orders" is active, then the most recently resolved effect takes precedence and monsters Level 4 or higher will be in Defense Position.
If "Caius the Shadow Monarch" is Summoned, it's changed to Defense Position immediately. After Caius' effect resolves, even if it banished this card, Caius will remain in Defense Position.
If you Summon "Spell Canceller" while "Level Limit – Area B" is on the field, "Spell Canceller" negates its effect and is not changed to Defense Position.
All Level 4 or higher monsters face-up on the field after "Level Limit – Area B" resolves will be in Defense Position. You can change the Battle Position of a Level 4 or higher monster, but it will immediately be changed back to Defense Position because of the effect of "Level Limit – Area B".