Pappachi's moth takes on several meanings in the novel. On the most basic level, it refers to the insect Pappachi discovers one day and believes to be a yet-undiscovered species. This is the big moment of his career, and, as we find out, "his life's greatest setback was not having had the moth that he had discovered named after him" (2.73). Later in Pappachi's life, some lepidopterists (butterfly experts) decide that it is actually a separate species of moth, but they don't name it after Pappachi – they name it after someone he doesn't even like. As a result, Pappachi is particularly cranky for the rest of his life.
When we learn the back-story of Pappachi's moth, we also learn that "Its pernicious ghost – gray, furry and with unusually dense dorsal tufts – haunted every house that he ever lived in. It tormented him and his children and his children's children" (2.76). Now, reading this, we don't exactly imagine that the ghostly image of a moth is literally creeping around the house and lurking in dark corners. Nevertheless, Pappachi's moth makes many appearances throughout the novel, specifically in moments when Rahel experiences fear. The narrator usually describes Rahel's fear as the icy feeling of Pappachi's moth's legs and wings upon her heart.
The first time we encounter Pappachi's moth, Rahel has just insulted Ammu, who responds that careless words cause people to love each other less. Rahel feels a strange sensation she has never felt before:
A cold moth with unusually dense dorsal tufts landed lightly on Rahel's heart. Where its icy legs touched her, she got goosebumps. Six goosebumps on her careless heart. A little less her Ammu loved her. (4.239-240)
In instances where Rahel feels more secure and more loved, the moth tends to let go of her heart a little bit. In moments when Rahel feels especially fearful, though, the moth is eerily present. For instance, when Rahel realizes that Sophie Mol has drowned, we don't read anything as direct as "Rahel was terrified." Instead, the narrator shows us her fear by using the symbol of Pappachi's moth:
On Rahel's heart Pappachi's moth snapped open its somber wings. Out. In. And lifted its legs. Up. Down. (16.18-24)
We don't know about you, but this moment totally creeps us out – and we're pretty sure it's supposed to.