^ yup, layer 2 is also LLC (logical link control) but that might getting a bit deeper than you need..
Keep in mind that you can create different layer 2 networks via smart switch, or different physical hardware.. A router would have 2 layer 2 networks its connected to.. The wan side and the lan side.. Or more even if has multiple lan or wan interfaces, etc.
The only reason rfc1918 addresses are confined to local network is they do not actually route over the internet.. If you traffic to your isp with destination of 192.168.14.100 for example.. It has no idea where to send that.. That network is not routed on the internet..
btw: not sure where you came up with the /16 in your posts.. From your post your networks on pfsense are /24.. I think users still get hung up on class of IP ranges, which has really been meaningless since cidr.. Some 24 years ago..
Yes the 192.168.0.0/16 space is defined as rfc1918 or local address space that does not route on the internet. But /16 is the whole netblock that can be used - you would never actually use a /16 mask on network you create.. That space would allow for 65k addresses, you would never put 65k address on the same layer 2/broadcast domain.. Nobody would ever be able to send real data they would all be too busy listing to broadcasts ;) The mask used to create the size of your network should be appropriate for the number of hosts you would be putting on that network.. /24 is very common because it allows for plenty of devices on that same network 254.. And it makes it very easy for humans to easy see what network it is – 192.168.X.0