Answer: character vs. self, because he is struggling to understand how the gods lived.
Explanation: in literature, a conflict is a struggle between opposite forces, it is often between a character (usually the main character or a very important one) and himself (internal conflict), nature, society or another character (external conflict). In the given excerpt from "By the Waters of Babylon" we can see an example of a character vs. self conflict, because the speaker doesn't understand how the gods lived, and this causes him to struggle.