Mechanical royalties are royalties paid to songwriters and music publishers when their music is reproduced. This can happen both physically (e.g. on CDs or vinyl) and digitally (e.g. through streaming services).
These royalties are due when a piece of music is mechanically reproduced and distributed. An example of this is when a track is played on a streaming service like Spotify. This reproduces the underlying composition, which in turn triggers Mechanical Royalties.