The blindfold symbolizes how the narrator himself is blind to the world around him and it also symbolizes how others are blind to who he really is. They stereotype him instead of looking at him as an individual person. Enotes states:
The story unfolds by narrating a scene in which those who are "blind" are not only the narrator, who literally wears a blindfold, but also those who abuse the narrator, sizing him up as mere stereotype, erasing his individuality and human dimension.
The narrator is blind simply because he has been raised in a world where the African-Americans and Caucasians have been kept separate; therefore, their lives are, in many ways, mysteries to one another.