I would like to know how Mahlo cardinals are used - as such examples may help me understand why they were created and so on.
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Here is a neat use of Mahlo cardinals that I have recently learned about:
Jensen proved that $\square_\kappa$ holds in $L$ for every uncountable $\kappa$. He also proved that if $V\models\lnot\square_\kappa$, then $(\kappa^+)^V$ is Mahlo in $L$. Moreover, Solovay proved that if $\kappa$ is Mahlo, and $\lambda<\kappa$ is regular then there is a forcing extension in which $\kappa=\lambda^+$ and $\lnot\square_\lambda$ fails.
Therefore Mahlo cardinals are used to negate squares on regular cardinals.
One point to make is that the definition of a Mahlo cardinal predates these proofs by three or four decades. This has little to do with the history and the original definitions of a Mahlo cardinal, but it does point out an interesting use for them.