This section of the novel comes at the end of Chapter Six, after Tom and Daisy Buchanan have been to one of Gatbsy's parties for the first time and Gatsby is convinced that Daisy did not enjoy it. Gatbsy, "incredulously," asserts his belief that you can repeat the past, and Nick goes on to comment:
He talked a lot about the past, and I gathered that he wanted to recover something, some idea of himself perhaps, that had gone into loving Daisy. His life had been confused and disordered since then, but if he could once return to a certain starting place and go over it all slowly, he could find out what that thing was...
Thus Gatsby's desire to "repeat" the past is his attempt to return to his halcyon days with Daisy, before she married Tom, where everything was wonderful and perfect. However, the fact of Daisy and Tom's daughter intrudes as an unpleasant reminder that it is impossible to return to the past. Note how Nick describes Gatsby when he sees her:
Afterward he kept looking at the child with surprise. I don't think he had ever really believed in its existence before.
Their child is a tangible reminder that Tom and Daisy did get married and that it is impossible to return to the past now.