Symbolism, Imagery, Allegory
Lardy-cake—okay, so it's not technically bread—is a traditional (and delicious-sounding) concoction of animal fat, flour, sugar, and spices. So basically it's like a donut.
Dolly Winthrop brings Silas some as a sympathy gift after his money is stolen, and there's something special about this cake: it's covered in mysterious letters. As Dolly says, "there's nobody, not Mr Macey himself, rightly knows what they mean; but they've a good meaning for they're the same as is on the pulpit-cloth at church." (1.10.25). Silas clears things up: the letters are "I.H.S.," although he doesn't know that they stand for the first three letters of Jesus' name in Greek (Ἰησοῦς).
The inscription of Jesus' name on the bread elevates the humble lardy-cake from delicious snack into something like Communion. In the Christian ritual of Communion, a congregation—or even just a few people—shares bread and wine as a memorial of the Last Supper, the meal that Jesus and his disciples shared just before the Crucifixion. In some traditions, the bread and wine are literally transformed into the body and blood of Christ; in others, they serve as a memorial of the Crucifixion and a symbol of the shared community of Christians.
In any case, Dolly offers the lardy-cake in a kind of Communion, attempting to bring Silas into the communal life of the village. Only Silas doesn't eat the bread. He does something that might even be better: he breaks off a piece and offers it to Aaron. This simple act transforms the lardy-cake into a symbol of religion more powerful, maybe, than the actual ritual of Christmas, which Eliot only describes as being held among "abundant dark-green boughs" and including the long Athanasian Creed. The villagers like the ceremony, but it hardly touches them. They leave unchanged, heading back "to eat, drink, and be merry" (1.10.56).