Excellent! You have selected the correct answer. Sir Mello Yello Bug correctly determined that this was a big drop for BLUE. He heard the other bug's comments, so he knew BLUE had 4 men left in his inner board. And Sir Mello Yello Bug saw that only BLUE had another checker left in the outfield (notice his view from the bugpile).
If you counted all of BLUE'S checkers, you saw that only 10 men had been taken off. That means 5 more BLUE men were still on the board somewhere. Counting is an important part of backgammon.
Always remember JENSEN'S LAW: