This is a tough question if you don't understand what the word "libel" means, which you rarely hear in everyday speech. On definition of libel that applies here, from the Princeton web dictionary, is
"a false and malicious publication printed for the purpose of defaming a living person."
So, in other words, something made to deliberately make fun of someone.
That being said, the passages that you are looking for can be found in chapter eight, where, for the first time in a long time, it actually snowed in Maycomb. Jem and Scout, excited, decide to make a snowman. They have a hard time of it--there isn't much snow, so it ends up looking more like a "mud man" than anything else. Well, Jem decides that "Mr. Avery's sort of shaped like a snow man, ain't he?" and then fashions the snowman to look almost exactly like him. Mr. Avery is an older, rather surly man who tends to be drunk quite frequently, and make grumpy and frightening comments to children to make them feel bad for being rowdy. Jem and Scout even witnessed him peeing off his front porch for quite a long time (and distance) one evening after too much drinking. So, Jem and Scout "succeeded in making Mr. Avery look cross" as a snowman. It was their way to kind-of make fun of Mr. Avery. When Atticus came home, he noticed the resemeblance immediatly, and said, "You've perpetraed a near libel in the front yard," because he looked so much like Mr. Avery that it is obviously noticable. So, they grabbed one of Miss Maudie's hats and try to disguise the snowman's resemblence to the cantankerous Mr. Avery.
I hope those thoughts help; good luck!