The quote comes in the middle of Ch. 5, after Daisy and Gatsby are reunited for the first time in years. Throughout the reunion, he points out his obvious trappings of wealth in an attempt to impress Daisy. The shirts are no exception. He finishes the tour of his ostentatious mansion, which climaxes in an orgy of color:
[He] began throwing them, one by one, before us, shirts of sheer linen and thick silk and fine flannel.… While we admired he brought more and the soft rich heap mounted higher—shirts with stripes and scrolls and plaids in coral and apple-green and lavender and faint orange, with monograms of Indian blue. Suddenly … [Daisy] began to cry stormily.
“They’re such beautiful shirts,” she sobbed.… “It makes me sad because I’ve never seen such—such beautiful shirts before.”
At both the first meeting and the tossing into the air of Gatsby’s shirts, Daisy cries. Gatsby deludes himself into thinking it's because Daisy loves him, but in reality, she is revealing her shallow obsession with materialism. Frankly, for her, it could be anyone she's crying over, as long as he owns "such beautiful shirts."
Although Gatsby is deluding himself here, some part of him knows that Daisy will never be the same for him. An illusion has become reality, and on some level he understand that's not what he wants. He states that she has a green light “that burns all night” at the end of her dock. He directly admits that “the colossal significance of that light had now vanished forever,” for the real Daisy, in contrast to the idealized Daisy, is no longer an “enchanted object.” The enchantment had become his total being, had consumed him—no human could have measured up. Daisy must have “tumbled short of his dreams—not through her own fault, but because of the colossal vitality of his illusion.”
Hi There, one of Gatsby's main objectives in the text is to create a new self that will meet the expectations of a girl named Daisy. Originally, Gatsby is born into a family of farmers, which he is ashamed of, he meets Daisy who loves riches and financial stability; therefore, after returning from war and finding out that Daisy has married Tom, Gatsby decides to do all in his power to acquire wealth. After acquiring that wealth, he is reunited with Daisy, and to show that he possesses wealth, he throws his fancy shirts on the bed to prove to Daisy that, he too, is wealthy, and hopes that material items, such as his shirts will make Daisy leave Tom for him. Hope this helps.