Answers 1Add Yours
When Ponyboy says that Two-Bit is "grinning like a Chessy cat", he is comparing him to the character of the Cheshire Cat from the Lewis Carroll story Alice's Adventures in Wonderland. The Cheshire Cat is a feline with the magical ability to become invisible except for his toothy smile; oftentimes in the tale, the large grin is all that can be seen of him. Two-bit, who has just played a prank on Ponyboy and Johnny by impersonating a threatening Soc, is grinning from ear to ear, and his demeanor reminds Ponyboy of the famous cat from Wonderland.
The literary term is an allusion. Pony is using a character from a work of fiction to describe Two-Bit.