In this paper we present computational and theoretical studies of extreme multielectron ionization in Xen clusters (n = 55-2171, initial cluster radii R0 = 8.7-31.0 Å) driven by ultraintense Gaussian infrared laser fields (peak intensity IM = 1015-1020 W cm-2, temporal pulse length τ = 10-100 fs, and frequency ν = 0.35fs-1). The microscopic approach, which rests on three sequential-parallel processes of inner ionization, nanoplasma formation, and outer ionization, properly describes the high ionization levels (with the formation of {Xeq+}n with q = 5-36), the inner/outer cluster ionization mechanisms, and the nanoplasma response. The cluster size and laser intensity dependence of the inner ionization levels are determined by a complex superposition of laser-induced barrier suppression ionization (BSI), with the contributions of the inner field BSI manifesting ignition enhancement and screening retardation effects, together with electron impact ionization. The positively charged nanoplasma produced by inner ionization reveals intensity-dependent spatial inhomogeneity and spatial anisotropy, and can be either persistent (at lower intensities) or transient (at higher intensities). The nanoplasma is depleted by outer ionization that was semiquantitatively described by the cluster barrier suppression electrostatic model, which accounts for the cluster size, laser intensity, and pulse length dependence of the outer ionization yield. [ABSTRACT FROM AUTHOR]