The carnival scene appears to be a symbol of normalcy, and of family. Paul D. is in high spirits there, and his exuberance influences both Sethe and Denver;
"no one, apparently, (was) able to withstand sharing the pleasure Paul D. was having."
The repeated references to the shadow of the three of them holding hands is a sign of hope. The image symbolizes unity and cohesiveness, and foreshadows that perhaps Sethe and Denver, with Paul D., might one day become a family.
Sethe in particular takes note of their shadows. It causes her to entertain the thought that
"...maybe...it was a good sign,"
and consider that they, the three of them, might at last find
"A life. Could be."
Denver, who is so insecure and jealous of her mother's attention, also finds that her doubts and fears that Paul D. will be a rival for her mother's affections are lessening. "Soothed by sugar" and the kindness that Paul D. is showing her, Denver, for the first time dares to consider that "Paul D. (isn't) all that bad," and that the three of them might work out after all.