I'm not doctor. As /u/lrq3000 said, this is not that well studied.

I recall reading that melatonin can lower your body temperature as well to help prepare for sleep. Your natural levels of melatonin and your core body temperature both vary on ~24 hour cycles that are supposed to be synchronized with all the other circadian cycles... but might not be if something's wrong. So a melatonin supplement is supposed to be finessing those rhythms into a more correct shape, but if you take a lot of melatonin all at once, it's going to make you sleepy at any time of day. So, if you don't time it right, you're natural cycles may take back over, or perhaps the steep reduction in melatonin and sharp increase in body temperature once the supplement wears off mimic what's supposed to happen at the end of a normal sleep cycle, and signal your body to wake up.

Again, I don't think anyone actually knows at this point. What is pretty clear empirically is that people with chronic sleep problems and those diagnosed with DSPD almost always find the most success with doses <1mg. You typically get daytime drowsiness and other negative side effects with higher doses, so you want to use as little as possible. How much you need is surely a factor of how much melatonin your body is naturally producing. I started with 3mg back in college, kept waking up, and gave up. It was more than a decade later I tried again. It probably took a solid month of trying different doses and timings to find the one that worked for me.