How did Steinbeck's description of the setting help set a vague, dreamlike mood for the beginning of Chapter 2 of The Pearl?

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The beginning of Chapter Two features a typical Steinbeckian (is that a word?!) description that really helps to create this dreamlike mood that you refer to and is one of the qualities of this slim but powerful novel. You want to pick out various descriptions that he uses and consider how they help contribute to this overall mood.

The overall impression, to me, is one of nature that has stayed the same for centuries. Note how the mention of "the canoes preserved for generations" is placed next to images of the animals in the sea:

The brown algae waved in the gentle currents and the green eel grass swayed and little sea horses clung to its stems. Spotted botete, the poison fish, lay on the bottom in the eel-grass beds, and the bright-coloured swimming crabs scampered over them.

Note how the verbs "waved" and "swayed" are used to create an almost soporific scene.

However, most central to the vagueness of the mood is the following description:

Although the morning was young, the hazy mirage was up. The uncertain air that magnified some things and blotted out others hung over the whole Gulf so that all sights were unreal and vision could not be trusted; so that sea and land had the sharp clarities and vagueness of a dream.

What is key in this description is how the imprecision of the "hazy mirage" is stressed through diction such as "uncertain air," "unreal," and "vagueness of a dream." The fact that there is "no certainty in seeing," emphasises this dreamlike scene where what is "seen" is never "certain," and seems to me raise this tale to an allegorical, archetypal level.