This is the mother of all anticipation stages. Although in the text this might last half the novel, we find out that it’s been going on for FIVE long years – beginning well before the summer of 1922. The desire for Daisy has driven all of Gatsby’s actions to date: acquiring wealth, buying the house across the bay, throwing his lavish parties, and befriending Nick.
When Nick reunites Daisy with Gatsby, they fall back in love. For a few weeks, the pair gets together in the afternoons and spends time dreaming about being together again, permanently. During this time, it must seem to Gatsby that he is close to realizing his life’s desires.
Gatsby’s problem is that he has focused all his attention on an illusion, a dream, rather than a real person. The reality, of course, fails to live up to his expectations. During this stage, Tom also begins to wonder aloud how Gatsby actually earned his money and whether he’s telling the truth about his past. Something about the man’s story seems fishy to him and he decides to investigate.
Gatsby is forced to realize that Daisy is more than a dream: she is a flesh-and-blood person with a real past that cannot be wiped out by a wish. When Tom realizes that Daisy loves Gatsby, he challenges Gatsby’s claim on his wife’s affections. Gatsby seizes the opportunity to claim that Daisy had never loved Tom and asks her to admit it. Unfortunately, she can’t admit it. It turns out that on this one point, at least, Daisy is honest. This is the moment when Gatsby’s dream starts to slip irretrievably away. He loses Daisy to Tom – in more ways than one.
In a classically tragic ending, a lot of people die. Right. The thing to keep in mind here is that there are more "deaths" than just Gatsby, Wilson, and Myrtle all kicking the bucket. The image of Daisy that Gatsby built up is now completely dead in the mind of the reader (because she leaves Gatsby behind), and the image of Gatsby that had been created by James Gatz is put to death with the arrival of his father, who dispels any remaining myths.