The quote that this question is asking about appears a little more than halfway through the story. Fred Collins finally gets permission from an officer to go get the water, and Fred begins to move away from the other men. Readers are told that as Fred begins to make his way toward the water, he is very much aware of the fact that he is not feeling any of the fear that he believes that he should be feeling. He then makes a connection that actually makes him feel somewhat uncomfortable. Fred realizes that he always thought that men that don't feel fear in dangerous situations must be heroes. Fred realizes that he must then be a hero too.
He wondered why he did not feel some keen agony of fear cutting his sense like a knife. He wondered at this, because human expression had said loudly for centuries that men should feel afraid of certain things, and that all men who did not feel this fear were phenomena—heroes.
He was, then, a hero.
Fred is actually disappointed in this realization. He is mentally aware enough to understand that a hero is meant to be revered by other people. They are supposed to be a perfected member of society that we look to in order to feel better about ourselves. Fred doesn't believe that he fits the hero mold because he has done shameful things. Fred feels in some way that he is tainting what it means to be a hero. He is intruding into a group in which he doesn't belong because he is supposedly not as worthy as "true heroes."
He saw that, in this matter of the well, the canteens, the shells, he was an intruder in the land of fine deeds.