The Problem

The server option log_slave_updates needs to be enabled on both m1 and m2

The Solution

Please add the following in /etc/my.cnf on both m1 and m2

[mysqld]
log_slave_updates

then run this on both m1 and m2

service mysql restart

The Reason

Let's use your example above

• m1 is Master of m2
• m1 is Master of s3
• m2 is Master of m1

Here is what happens when you run INSERT INTO mydb.mytable ... on m1

• m2 executes INSERT
• m2 records INSERT into the current binary log along with server_id=23
• m1 retrieves INSERT from m2 via I/O Thread
• m1 records INSERT via I/O Thread into lastest relay log
• m1 retrieves INSERT from relay log via SQL Thread and examines its server_id
• m1 sees that the server_id of the INSERT is 23 which is not the same as m1's server_id (1)
• m1 executes INSERT

OK, all well and good. But, why doesn't s3 get to receive anything? Because log_slave_updates is not enabled, m1 does not save the INSERT and the original server_id posting the INSERT into its own binary logs.

If log_slave_updates was enabled on m1, now follow along your example and let's see what should happen:

• m2 executes INSERT
• m2 records INSERT into the current binary log along with server_id=23
• m1 retrieves INSERT from m2 via I/O Thread
• m1 records INSERT via I/O Thread into lastest relay log
• m1 retrieves INSERT from relay log via SQL Thread and examines its server_id
• m1 sees that the server_id of the INSERT is 23 which is not the same as m1's server_id (1)
• m1 executes INSERT
• m1 records INSERT into the current binary log along with server_id=23
• s3 retrieves INSERT from m1 via I/O Thread
• s3 records INSERT via I/O Thread into lastest relay log
• s3 retrieves INSERT from relay log via SQL Thread and examines its server_id
• s3 sees that the server_id of the INSERT is 23 which is not the same as s3's server_id (21)
• s3 executes INSERT

This fully explains why s3 never sees anything from m2