How does imagery and figurative language contribute to the development of the story?

Imagery, connotation, similes, and metaphors very much contribute to the mood and symbolism of the story as well as foreshadow future events. 

When Jerry goes to his "wild bay," he "slid[es] and scrap[es] down" an incline of "rough, sharp rock" to water that "showed stains of purple and darker blue."  These words are associated with pain, with something that can inflict pain, or with the effects of pain.  Even the image of stains of blue...

Imagery, connotation, similes, and metaphors very much contribute to the mood and symbolism of the story as well as foreshadow future events. 

When Jerry goes to his "wild bay," he "slid[es] and scrap[es] down" an incline of "rough, sharp rock" to water that "showed stains of purple and darker blue."  These words are associated with pain, with something that can inflict pain, or with the effects of pain.  Even the image of stains of blue and purple sound like a bruise.  Further, "rocks lay like discoloured monsters under the surface" of the water, and "irregular cold currents from the deep water shocked his limbs."  The initial simile is frightening, comparing the rocks to scary and violent creatures waiting for unsuspecting swimmers, as is the next tactile image of being physically shocked by random freezing jets of water.  From all of these painfully-connoted words to the frightening and shocking images and comparisons, we can gather that this wild bay is a place of danger to Jerry.  He is not safe here, not like the older boys who can play here without incident.  Jerry is too young for this bay.

On the other hand, the metaphor and simile used to describe his mother, on the "safe beach," clearly connote that it is a place for children, long before Jerry realizes it as such.  She was "a speck of yellow under an umbrella that looked like a slice of orange peel."  Such cheerful, citrus colors are more appropriate to a beach vacation; they are much more appropriate than the bruised colors of the "wild bay."  They help us to understand that the wild bay and the safe beach are much more than just two different places to play.