The literal answer is that Tayo and Rocky (cousins who were raised as brothers, although Rocky was always treated better) fought during WWII in Japan. At one point, Tayo refuses to kill a Japanese soldier, insisting that the man is his uncle Josiah. Although Rocky tries to explain that the man can't possibly be Josiah, Tayo insists he is.

There are much deeper meanings at work here though. Tayo's experience in WWII, especially his inability to save Rocky, has led to seemingly incurable psychological problems, as well as a crippling sense of guilt. He is also convinced of the interconnectedness of all life, blaming himself for the drought on the reservation because he cursed the rains in Japan. This also explains the hallucination of Josiah as the Japanese soldier; for Tayo, every life is connected.