George and Lennie are discussing their dream of a nice big ranch with 100's of bunnies. This is setting up the plot for the rest of the story. You should always make or set dreams for your future because their is always a brighter side to life.
Lennie is continuing to kill animals however this time it was a dog which wasn't that small. This is foreshadowing the death of Curly's wife who again, isn't that small. Lennie is now learning how dangerous he truly is.
Lennie killed Curly's wife by being a little to rough while trying to quiet her down. Lennie was upset when Curly's wife no longer wanted him touching her hair, she started to scream because she was frightened and instead it resulted in her passing. This taught a very thoughtful message of how important it is to control you temper.
George is drinking with all of the characters, that remain alive, in the book. This shows that not only George has given up on his dream by wasting money, but that they all have given up some sort of dream. This could explain their anger and temper in the beginning of the book. This chapter showed us all that most dreams don't come true, and a happily ever after isn't always guaranteed.