In his writings, Joyce is often extremely critical of the Catholic Church in Ireland, presenting its domination of Irish public life as chiefly responsible for the country's cultural and intellectual sterility. And in "Araby" it's no different. The unnamed narrator, like virtually everyone in this society, is a Roman Catholic. Wherever he goes and whatever he does he's surrounded by the symbols of the Church. The boy has been raised as a Catholic, goes to a Catholic school. His very language is steeped in religious imagery. It's notable that he refers to the object of his affections—Mangan's sister—as a "chalice." It's as if she's the Holy Grail, and he is her knightly protector.
The symbolism here is unavoidable. The narrator's putting of Mangan's sister on a pedestal diverts him from the truth, from the cold, harsh realties of life. It's only when he arrives at the bazaar too late that he's finally disabused of his fantasies. Joyce appears to be drawing a parallel here with the Catholic Church. As a staunch atheist, Joyce believes that the Church is leading people away from the truth, deliberately keeping them in a state of ignorance to consolidate its hold over them. On this reading, the childish fantasy life of the narrator is intended to represent what Joyce sees as the religious delusions under which the vast majority of Irish Catholics labor.