Explain the significance of the last sentence of the book: "The creatures outside looked from pig to man and from man to pig and from pig to man again:but already it was impossible to say which was which."

The pigs have become so much like men in the way they act and the things they have taken up, that their images begin to meld into the images of the men in the room.  Ultimately, there is no real difference and the animals who look in from the outside no longer can figure out who is who.

This is Orwell's opinion of the government of the Soviet Union. The original revolutionaries had lost control to a bureaucratic wing that aspired more and more to being like the capitalist class that they had overthrown. The particular context is that Orwell had become very hostile to Communism by this point, despite having earlier fought on the same side in the Spanish Civil War.