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that is very interesting. based on the wiring diagram, assuming the power inters the top of the fuses and goes out the bottom of the fuses, that melted portion is unfused. There should only be a single wire connected to the top of fuse #7 of the 8 fuse block. it should be a size 0.5 grey wire. coming from the light switch. the bottom should have 2 wires going out a 0.5 grey to the license plate lights and a 1.0 grey going to the headlight washer switch. I can't tell if you have 2 wires coming out the bottom in the pic, but regardless the insulation on the wire coming out the bottom that is visible looks to be in poor condition.
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