If the reader extends the symbolism to the entire novel, then the "mirage" is Kino's hope after having found The Pearl of the World that he will be able to move his family to a higher socio-economic class, hoping for a beautiful wedding, clothes, guns, and an education for his boy. However, as in the passage, "all sights were unreal" and Kino's vision cannot be trusted to prove right. For, instead of a better life, people learn of his fortune, and greedy men seek to take the pearl from Kino. Thus, the "sharp clarities" are the reality that Kino has people trying to kill him for the pearl. Realizing that he and his wife will have no peace, Kino throws the pearl back into the sea, and all his aspirations of a better life acquire "the vagueness of a dream."
Here is the full passage:
Although the morning was young, the hazy mirage was up. The uncertain air that magnified some things and blotted out others hung over the whole Gulf so that all sights were unreal and vision could not be trusted; so that the sea and land had the sharp clarities and the vagueness of a dream.
To look at this description one needs to look at the events surrounding the morning. The day before Kino's son had been stung by a scorpion and he had gone to seek help from the doctor. The doctor had ignored him pretending that he was not home.
The day being described is the following morning when hope seeks somewhat lost to Kino. The description shows that the morning was hot but not very clear. The Indian people looked to the seas and the sights for omens as to what the day could bring, but they were also distrusting enough to know they could not be clearly seen by man.
The mirage is made from the warm water creating a steam over it. Kino is in a dream like state himself as he is worried about his son.