  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 satellites and the concentration
of their stellar populations, and self-consistently follows the accretion and
disruption of progenitor dwarfs and the build-up 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 Milky Way halo and its surviving dwarf satellites, like velocity
dispersions, sizes, brightness profiles, metallicities, and spatial
distribution. Our model predicts the existence of approximately 1,850 subhalos
harboring "extremely faint" satellites (with mass-to-light ratios >5,000) 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 Msun
before redshift 9. The ten most luminous satellites (L> 1e6 Lsun) in the
simulation are hosted by subhalos with peak circular velocities today in the
range V_max=10-40 km/s 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 and stellar line-of-sight velocity dispersion today follow the
relation V_max=2.2 sigma_los. We apply a standard mass estimation algorithm
based on Jeans modelling 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 Milky Way dwarfs. We do, however, predict a weak,
but significant positive correlation for these objects: M_300 ~L^{0.088 \pm
0.024}.
