The "inward eye" the poem's narrator speaks of in the last stanza is memory. In this final stanza, the narrator also says that often when he is lying on his couch in a "pensive" mood, his mind flashes back to the dance of the daffodils he saw on an early spring day. This memory gives him happiness. Wordsworth writes,

For oft, when on my couch I lie

In vacant or in pensive mood,

They flash upon that inward eye

Which is the bliss of solitude;

And then my heart with pleasure fills,

And dances with the daffodils.

One of the goals of Wordsworth had was to write poems about emotions he experienced as he recollected them in a more tranquil state. At the end of the poem, the narrator is tranquilly recapturing his emotion of pleasure at the sight of the daffodils. Since Wordsworth wrote a poem about the joy the daffodils gave him, the rest of us, even if we have not seen such a sight, can imagine the daffodils with their yellow heads gaily dancing in the breeze in front of a sparkling lake. We too then can participate in the pleasure.

The "inward eye" is the insight of the mind and spirit that has recorded an experience and delights in its beauty and inspiration later when recalling its memory.

In his essay on "Nature," Transcendentalist (precursor to an American Romanticist) Ralph Waldo Emerson writes that when he is out in nature, he becomes

...a transparent eyeball. I am nothing. I see all. The currents of the Universal Being circulate through me....I am the lover of uncontained and immortal beauty.

So, too, does the speaker of Wordsworth's poem experience the "uncontained and immortal beauty" of the daffodils. His memory records the delight that he experiences in the lovely sight of the golden daffodils whom he personifies as a "jocund" company that toss their heads and dance. Indeed, their freedom and beauty inspire him and the image of this romantic delight in nature remains for him to recall when he lies on his "couch" at home and reflects upon the enjoyment of the beauty of Nature that he has previously experienced.