What does mean when we say mel scale reflects how humans hear musical tone
The Mel scale is not in Hz units but rather Pitch level.

The point of the Mel scale is to return an estimate of the perceived pitch and it is more useful when looking at differences rather than single values.

So, if you notice the Mel scale as it extends past 3500 Hz, it tends to a straight line. This means that a human being would rate differences in frequency as expected (doubling of frequency results in proportional increase in the Mel scale).

But below 3500 Hz, the curve is more sensitive to frequency variation.

This is part of more general observations in perception where perception and stimulus are in logarithmic relationship.

Hope this helps.

EDIT:

In terms of an example, you can think of the siren of an ambulance. The Mel scale "predicts" that if you were to transpose the siren's centre frequency to a higher one, you might not be perceiving it as going up and down that much while the modulation level is exactly the same. And that's something to think about. Objectively same quantities evoking different perceptions. Taken to the extreme, there could be a frequency range that the Mel "line" becomes so shallow that if asked a listener would say "all I hear is a constant tone" although the siren still goes on at its regular Neeee-Noooo-Neeee-Nooo sound.