"He was the one who first confronted him when an air hostess was getting scared of this guy and that's when the guy said "I'm going to blow up this plane", she said.
Armed officers from an elite police unit boarded the flight, handcuffing Marks and escorting him off. Photographs taken by a passenger and supplied to AFP showed security officers carrying rifles in the cabin.
The aircraft had departed Melbourne at 23:11 local time for Kuala Lumpur.
The man was alleged to have been brandishing an unidentified black object that he said was a bomb.
He was overpowered by crew and passengers and the plane returned to Melbourne for an emergency landing.
The captain then declared to the passengers that the jet will be returning to the airport.
Victoria Police said the incident was not being treated as terrorism. Both charges carry a maximum sentence of 10 years imprisonment.
About 11.28pm: The man got out of his business class seat as the plane was ascending and reportedly took an item out of his overhead luggage. Nonetheless passengers on board were extremely frightened as the men was shouting that he was going to blow up the plane.
"We had an adequate assessment for safety of the passengers, there wasn't really any delay that was unacceptable from our point of view", he said.
Mr Marks, in Australia on a student visa, had been released from a psychological facility on Wednesday and bought his plane ticket hours later.
His lawyer Tess Dunsford told the magistrate Marks suffered from a psychiatric illness and would not apply for bail.
About 30 minutes into the late night Wednesday flight, the man claimed to have explosives in a device that one witness said looked like a "boombox".
A spokesperson for the airline said the incident was caused by a "disruptive passenger" who was later arrested.
Questions have been raised over the amount of time it took police to arrest Mr Marks.
A total of three Malaysia Airlines flights are now scheduled to depart Melbourne today.
The airline said the incident would be investigated.