In this line,
"Dread lay on Jess's stomach like a hunk of cold, undigested doughnut",
the author is using a simile to describe what it feels like to be very afraid that something bad is going to happen. It has been raining steadily for several days, and the river over which Jess and Leslie must cross to Terabithia is swollen and dangerous. Jess, being more fearful by nature, would have preferred not to visit their imaginary land until the weather clears up, but Leslie is fearless, and continues to want to go anyway. On this day, she wants to venture even further into the dark, forbidding woods, and, as they stand in a thick grove of trees, "the sound of the rain hitting the pine branches high above their heads fill(s) the grove with a weird, tuneless music". As Jess, who didn't want to come in the first place, stands there under the trees, he is overcome by a sense of dread, which lays on his stomach "like a hunk of cold, undigested doughnut".
A simile is a figure of speech whereby two unlike things are compared, using "like" or "as". In this case, the feeling of fear and dread, and the nauseating, stomach-churning sense that often comes with it, is likened to the discomfort one might feel after eating a cold, hard, greasy doughnut (Chapter 9).
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