It seems obvious that by far the biggest conflict that Jimmy Cross experiences is not the obvious physical external conflict that surrounds him through the war, but actually the internal conflict that goes on inside of him and his tendency to engage in daydreams concerning Martha, even though he knows that she is not really interested in him. He blames these daydreams for the death of Lavender, as it was when he was engaged in one of these daydreams that Lavender was shot. Note how this conflict is resolved at the end of this story when Jimmy Cross burns Martha's photos and letters:
He was realistic about it. There was that new hardness in his stomach. He loved her but he hated her.
No more fantasies, he told himself.
He from this point onwards determines to only think of Martha as a figure that "belonged elsewhere" in a very different world of "pretty poems or midterm exams." He inhabits a world where men died because of "carelessness and gross stupidity," as the death of Lavender has shown, where daydreams were a dangerous luxury that could have serious consequences. Thus he will "shut them down." The sadness and conflict however, is that the horrors and grim realities of war are that much easier to bear if one does have daydreams to turn to, and we fear for the new "hardened" Jimmy Cross who deliberately eschews such release.