The street between the two snipers' rooftop hiding spots represents the Irish Civil War itself. This was a conflict generated by a national divide over the recent Anglo-Irish Treaty between Great Britain and Ireland. This treaty maintained that Ireland would continue as a self-governing dominion within the British Empire. In the story, the protagonist fights for the anti-treaty Irish Republican Army against the pro-treaty Free State forces, represented by the old woman informant, the driver of the armored car, and the sniper on the rooftop across the street.
It is in the street where most of the action of the story plays out. The protagonist sees the informant give away his location, and so he has to kill her. So, too, must he kill the man she told. After he shoots, her body falls into the gutter. It's as though the street has been turned into an actual battlefield, with dead bodies just lying around; the very city of Dublin, a place where people live and work, has been turned into a war zone.
It is also notable that when the protagonist shoots the enemy sniper, the man's body falls from the rooftop and into the street below. The protagonist goes down to the street level, where he is shot at some more, and the narrator reports that in "the upper part of the street there was heavy firing" too. It is here that the sniper realizes he has killed his own brother, and the street represents this oxymoronic civil war, which pits brother against brother.