What you are looking here is Cascading Dropdown, you would need to create your lists design to implement this kind of requirement.
Create Master List - Books
Minimum Columns required - BookName
Create Master List - Chapters.
Minimun columns required - ChapterName, BookName
BookName column should be lookup column to above Books list and BookName Column.
And then you will have your reference list- Custom List(this you already have)
Minimum columns required - Title, BookName, ChapterName
BookName column should be lookup to above Books list and BookName Column.
ChapterName column should be lookup to above Chapters list and Column ChapterName.
Implemeted Cascading dropdown list funtionality like below.
Deployment is simple:
in IE open the SharePoint form where you want to implement cascading dropdowns
Insert a Content Editor WebPart into the page after the form (how? Instructions here)
Edit properties of the webpart and edit its source code.
Link Script to the page
var ccd1 = new cascadeDropdowns(ParentDropDownTitle, ChildDropDownTitle, Child2ParentFieldIntName, ChildListNameOrGuid, ChildLookupTargetField);
Refer this link for more details