This statement is from a description of the pig's head that Jack and his hunters stuck on a stick as a sort of sacrificial offering to the "beast" on the island in chapter 8. Simon sees this head, the Lord of the Flies, and he goes into one of his trances. The statement refers to the fact that the head represents the evil inside of all people. It is this evil which is the problem on the island and among the boys. Golding believed in thiis idea of inherent evilness and he believed that it especially came out as one aged from child to adult. The boys have to grow up very quickly on the island because there are no adults, so the evilness comes out in them more quickly than it would if they were in society and civilization. The "infinite cynicism of adult life" means that there is no end to the lack of belief in goodness; that adults know that people are not good and that they do not act without selfish motive. The Lord of the Flies tries to poison Simon with this belief; that all adults think this way and that all people are bad. Simon realizes though that knowing that there is an evilness inside of each person is the first step in preventing that evilness from coming out. He sees that if they are aware of the presence of this natural tendency, they can stop the tendency and stop the beast. This is why Simon had to die in the story. The beast could not allow Simon to share this insight. The beast laughs at Simon's naivete, which is also part of that cynicism referred to in the quote.