Literally, the Valley of Ashes is a massive trash dump. The rotting valley represents the rotting American dream. Tom, Daisy, and Jordan, with their endless socials and superficial lives represent how material excess rots their very souls. Their lives, like the valley, are hollow. As time goes on the valley gets ranker as do the lives of many characters in the novel. Self-centered individuals litter the story with meaningless "trash", much like the valley itself.
ut the valley of ashes can also be seen as more commentary on the American Dream. (THAT again?! Yes.) The America of The Great Gatsby is ashen, decaying, and barren. It is also, based on the action that goes down in the valley of the ashes, devoid of morality and compassion. Myrtle Wilson lives by the ashheaps, and so there resides Tom’s infidelity. George Wilson lives by the ash heaps, so we can place there both anger and envy. Myrtle is, of course, killed there, so we also come to identify death with the valley (in case Nick’s initial description wasn’t enough for you).