Simon comes across the pig's head in chapter 8. Previously Simon went to that clearing area and was amazed at the beauty of it all. That clearing was a place of peace and harmony to Simon, a place where things made sense to him and a way to escape the craziness that was beginning to take hold of some of the boys, like Jack.
When Simon returns to his quiet place in chapter 8, he sees the head of the sow on a stake. It represents a complete abomination to Simon. It is the complete destruction and desecration of the clearing. While Simon is staring at the pig's head, he begins hearing a voice: the voice of the Lord of the Flies. But to Simon it sounds as if it is coming from his own mind, which is a deep revelation to Simon. The beast that all of the boys fear is not an actual beast, but the potential for evil that lurks in the hearts and minds of each person. The boys need not fear any actual beast on the island, but need to fear each other.
The pig's head represents the realization that each of the boys can be their own worst enemy.