What does Nick think the green light means to Gatsby at the beginning of Chapter 5? Why does he feel Daisy has fallen short of Gatsby's dreams?
Gatsby mentions the green light at the end of Daisy's dock, a light that burns all night. Nick thinks that, perhaps, "the colossal significance of that light had now vanished forever" because the green light used to hold such a great deal of symbolism for Gatsby. It was Daisy, her status, her money, her memory, her love, her life: so close to him and yet so very far away -- like "a star to the moon." Now that Daisy is here in front of Gatsby, the light can no longer feel "enchanted" as it once did; now, for Gatsby, it's just a light because all the things it represented are right in front of him and do not need to be represented anymore.
Having watched the interaction between Gatsby and Daisy that day when they were first reunited, Nick says, "There must have been moments even that afternoon when Daisy tumbled short of his dreams -- not through her own fault, but because of the colossal vitality of his illusion. It had gone beyond her, beyond everything." In his mind, Gatsby had built Daisy up, had turned her into something mythic, something more than a human being with flaws could possibly ever be. So, when confronted with the reality of a real-life Daisy, there doesn't seem to be any possible way that she could live up to this dream of her that Gatsby has spent years constructing.
Nick appropriately realizes that Daisy's green light symbolizes Gatsby's American Dream. The light does not simply represent Gatsby's quest for Daisy's love; it envelopes the idea of what it means to be part of Daisy's aristocratic class: sophistication, acceptance, respect, power.
Daisy falls short of Gatsby's dream because no human could ever fulfill a dream such as his and because she is tarnished and disiillusioned by Tom's treatment of her. She is no longer the golden American Dream.