What is "Araby" and what does the boy mean by saying it cast an eastern enchantment over him?

In a literal sense, "Araby" is a church-sponsored bazaar that comes to Dublin.  An "eastern enchantment" refers to an aura of magic from the Orient, exotic, rich, and full of promise and pleasure.  The young narrator waits with great anticipation for the carnival to arrive; the girl of his dreams has told him she cannot attend, and he has promised to to go in her stead and bring her a gift from the bazaar.  Araby takes on a huge significance in the narrator's imagination as its commencement approaches, and he envisions it to be a splendid event full of possibilities.  The reality, however, is a tremendous let-down.  The narrator is late to the bazaar and arrives when it is closing.  The mercenary nature of the affair is represented by the sound of coins being counted by two men falling on a salver. The sales people are uninterested in his presence, distracted, and rude, and the wares are uninviting.

In a metaphorical sense, Araby represents an adolescent boy's hopes and dreams.  The narrator imagines an attainable world full of wonder and romance, only to be disappointed by the reality of everyday life in a world of drabness and mediocrity.