It is in Chapter Seven that we find out that this important song, which in many ways characterises the animals' spirit and desire to live free lives and was sung at the end of every meeting, has been banned. Of course, the freedom that it heralds is being slowly replaced by the tyranny of the pigs, as was amply illustrated by the execution of the three chickens. Squealer insists that this song is now banned because the "Rebellion is now completed," but this does not stop the animals from feeling uncomfortable about it themselves. Note how we are told the animals responded:
Frightened though they were, some of the animals might possibly have protested, but at this moment the sheep set up their usual bleaing of "Four legs good, two legs bad," which went on for several minutes and put an end to the discussion.
It is important to note that even after the public executions, the animals were still ready to protest about the banning of the song, showing that at least on some level they were aware of what it symbolised and how they were aware of the tyranny that was taking control of the farm.
At the time that the pigs have banned the song, the animals are shocked with what they have witnessed. Napoleon's dogs have savagely attacked the throats of those who have "confessed" to acting against the farm. In the end, the banning of the song is like an add on to everything else. The animals' reaction is one of bewilderment at what they have seen. Yet, at the same time, there is a dulling of reaction on the part of the animals. The animals are slowly becoming accustomed to life on the farm and life under the pigs' rule. There is no active voice of dissent that would dare speak given what was seen regarding Napoleon's brutality. As the narrative progresses, some animals sing the song now and then, but nothing is taken on the level of resistance against the pigs' power. Additionally, as time passes, the animals that actually remember the song begins to dwindle. More dogs and pigs populate the farm, and in accordance with those in the position of power increasing, the animals begin to phase out the song. The songs of Minimus that profess the power of both the farm and the animals' submission to it begin to dominate, while the revolutionary idealism of "Beasts of England" goes away. The animals' reaction is one of complicity to this state of affairs, emboldening the pigs and dogs and devaluing the other animals.
This question has already been answered here on eNotes. Here is a link for you: http://www.enotes.com/animal-farm/q-and-a/explain-animals-reaction-banning-song-beasts-268681