Answer
The idea of scaling is that different properties of an object, such as surface area of volume, grow at different rates as the object grows. This has consequences, such as insects being proportionately far stronger than much larger creatures (discussed on page 236).
When related to governance, scaling says that principles and methods that work for a small population may not work when applied to a larger population.
For example, holding a mayoral election by a show of hands may work for a small town, but the system could not work in, say, New York City.