The Beast, is, as Golding's final page has it, "the darkness of man's heart". It's the evil, the fundamental badness, inside all human beings - which has to be fought to prevent human civilisation descending into savagery. And what you're seeing when the "beast" talks here, is Simon hallucinating - remember that Simon suffers from epilepsy (and possibly other things as well) and has some sort of gift of prophecy.
"Maybe... it's only us", Simon says right at the start of the novel. And the Beast gives the same verdict on the situation: "You knew, didn't you? I'm part of you?". It's Simon's mind in dialogue with itself.
It's also a clever pun. The flies swarming around the pig's head give the illusion of movement, making the head seem alive. The head, then, becomes the "Lord" of the flies - which is a translation of "Beelzebub" or the Devil. So what symbolically speaks as "the darkness of man's heart" is also, literally, the lord of the flies - the devil.
Hope it helps!
To use a phrase from Shakespeare's Julius Caesar, the Beast is "the evil men do." It is a manifestation of man's darker side as it is revealed to Simon.
Simon has tried to suggest to the boys that the Beast that they have seen may possess some of the qualities that they find in themselves. In Chapter Five, Ralph calls an assembly to "put things straight." Ralph wants the boys to understand how important it is to keep a fire going and to build shelters, but he also wishes to discuss another issue.
In the course of the gathering, Ralph wants to discuss the fears that some of the boys experience. The litt'uns talk of "a thing, a dark thing" that frightens them. But the intuitive Simon, who goes to a secluded place, comments on "mankind's essential illness" and suggests that the Beast is "only us."
In Chapter 8, when Simon hides in the clearing and Jack and the hunters have left, he remains where he is after the others depart. Then he sees the pig's head, and even if he closes his eyes the head remains in his mind's eye. When he does open his eyes, the half-closed eyes of the Beast "assured Simon that everything was a bad business" (Ch. 8). Simon recognizes that the evil—the Beast—that exists is inherent in mankind. For this reason, the pig's head with flies swarming it—the Lord of the Flies—seems to say to him, "You knew, didn't you?"
It is also important to realize the symbolism of Simon as the Christ-figure and the pig's head as the devil. The Lord of the Flies tries to tempt Simon through ridicule, just as Satan did to Jesus.