What it means?

The term human grade in pet food means the finished product is legally suitable and approved as nourishment for humans. It is "edible." Human foods are more regulated than foods made for animals. Human grade foods are extremely important to feed your dog because if it is not fit for human consumption, your dog could be eating unknown tainted foods (such as roadkill, diseased animals, etc.

How it applies?

Human food is much more highly regulated and has very strict standards on quality, ingredients, and nutritional profiles. FDA and AAFCO have loose guidelines for dog Foods that contain filler ingredients like cornmeal and soybean hulls which add no nutritional value to the food. They are also why many dog food companies use animal-byproducts which can contain highly processed disease or rotten meat or the excess materials from industrial meat production like beaks, feathers, and fat.

Additional info?

Some companies may tell you that they can't classify as "human grade", but don't buy what they are telling you. The company should be able to tell you that their ingredients they use are human grade!