Short Answer 
Gatsby idealizes Daisy, transforming her into a fantasy that disconnects him from her true self, leading to an obsession based on dreams. This creates a divide in their relationship, resulting in disappointment as the real Daisy cannot meet his unrealistic expectations, highlighting the dangers of love founded in illusion rather than authentic connection.
Step 1: Understanding Gatsby’s Idealization
The quote highlights Gatsby’s tendency to glorify Daisy, transforming her into an idealized figure in his mind. He perceives her not just as a person but as an embodiment of his dreams and desires. This leads to a disconnect between his affection for the real Daisy and the one he has created, making it essential to recognize that his love is based on fantasy rather than reality.
Step 2: The Impact of Dreams on Reality
Gatsby’s feelings for Daisy illustrate how dreams can shape one’s perception of reality. He is enamored with the idea of her, which includes all his hopes and ambitions. This obsession creates a significant divide, as he is in love with an *illusion* that no actual person could fulfill, making it important to understand how dreams can distort relationships.
Step 3: The Consequences of Unrealistic Expectations
Ultimately, Gatsby’s infatuation with an idealized version of Daisy leads to inevitable disappointment. When faced with the real Daisy, who cannot meet his exalted expectations, it becomes clear that he is chasing an unattainable dream. This teaches a valuable lesson about the dangers of placing unrealistic expectations on others, as well as the repercussions of a love that is rooted in fantasy rather than genuine connection.