In Jain understanding, the deeper meaning is not that the soul becomes truly human or animal in essence. Rather, it points to the extraordinary karmic and pudgalic capacity of a highly developed being or ascetic state to transform visible form, appearance, and association with matter. The soul remains soul; only the body or manifested form changes through the interaction of karma and pudgala. This is consistent with Jain teaching that beings move through different states of existence and that advanced celestial beings possess special body-transforming powers. ( jainpedia.org)

So the teaching can be understood in two layers:

1. Literal layer: Bhagwan affirmed that such transformation is possible in Jain cosmology for beings with extraordinary powers.
2. Deeper spiritual layer: It shows that matter is mutable and identity is not in the body but in the soul. Even the most amazing bodily transformations are still within the realm of ajiva and pudgala; they do not imply liberation. This is an inference from the Jain view of body-transforming powers and the soul-matter distinction. ( encyclopediaofjainism.com)

About the “flattening the hill / making it uneven” part: the deeper idea is that special spiritual power can alter or affect material arrangement, but this is still a worldly शक्ति (labdhi), not the final Jain ideal. Jain Dharma places higher value on self-restraint, equanimity, and karmic shedding than on miraculous display. That is why such questions in the Bhagavati Sutra are meant to reveal the subtle science of karma, matter, and transformation, not to glorify miracles. ( jainqq.org)

In short: The teaching means that a highly potent state can manipulate matter and forms, but the soul’s purity is measured by freedom from attachment and karma, not by miraculous shape-changing.