What does this quote refer to? "But Darry never got over it, and every once in a while he would ask me if I ever dreamed anymore.'Was it very bad?' Two-Bit questioned. He knew the whole story, and having never dreamed about anything but blondes, he was interested."

This quote directly follows Ponyboy's recollection of his mother and father's funeral and the nightmares he endured starting on the night after they were laid to rest. The word "it" in the independent clause, "he never got over it" has a deliberately ambiguous referent. It points most concretely to Darry's trauma from witnessing Ponyboy struggle through his nightmares, which he internalized just as powerfully. In that sense, the quote connects Ponyboy and Darry, whose brotherhood creates an emotional bond.
The quote also indirectly refers to the real death of the Curtis brothers' parents—a trauma in its own right—which Ponyboy psychically processes through his dreams. Two-Bit's oblivious question at the end of the quote signifies that he lacks the bond that Ponyboy and Darry share, and hints at his innocence about parental loss.