Although to me none of these options seem correct, I'd still choose 3. He realizes that he has been so caught up in dreams that he has failed to recognize the simple joys of everyday life.
This is the final sentence in Araby: "Gazing up into the darkness I saw myself as a creature driven and derided by vanity, and my eyes burned with anguish and anger."
You can see here that he is definitely not happy about his experiences at the bazaar - he realizes some truths about life and is completely crushed after that realization.