The novel Sula by Toni Morrison tells the story of Sula and Nel, two childhood friends who grow up in Medallion, Ohio. The are black girls who grow up differently, but who share a deep, life-long connection. One day when the girls were still quite young they were playing by a lake with a little boy known as Chicken Little. Sula was swinging Chicken Little around by his arms, but her grip slipped and he landed in the lake. Unable to swim, he drowned. The girls were afraid of what had happened and didn't report the event to anyone, so it was several days before Chicken Little's body was discovered. Sula was upset and Nel did her best to assure her that it was an accident. After the funeral they seem to have been able to put the horrible event behind them. The quote in your post tells what happened to Chicken Little for his burial. He was a poor black boy who had little family, so the townspeople did what was expected of them and they buried him between his grandfather and one of his aunts. I think it is important that they "sank" him because the word has a colloquial feel to and it plays off the idea that he sank in the lake. The memory of what happened also sank into nothingness for Sula and Nel.
The memory resurfaces in the final chapter of the novel when Nel goes to visit Sula's grandmother. Eva is very old and seems to be confused through their conversation, but she does accuse Nel of letting Chicken Little drown. Nel is shocked that she knows and tries to defend herself by reminding Eva that it was Sula that held his hands and then lost her grip -- Nel was only a bystander. Eva doesn't let her off the hook though. She rightly comments that Nel stood there and not only saw what happened but that she "watched" it happen -- implying that Nel didn't do anything to help Chicken Little and therefore she is as "responsible" as Sula ever was. Nel never looked at that way, but the comment makes her reflective, and ultimately, she comes to a better understanding of the sunken memory, and of her complicated relationship with Sula.