This is perhaps the most well-known of the Indian festivals: it is celebrated throughout India, as well as in Indian communities throughout the diaspora. It usually takes place eighteen days after Dusshera. It is colloquially known as the "festival of lights", for the common practice is to light small oil lamps (called diyas) and place them around the home, in courtyards, verandahs, and gardens, as well as on roof-tops and outer walls. In urban areas, especially, candles are substituted for diyas; and among the nouveau riche, neon lights are made to substitute for candles. The celebration of the festival is invariably accompanied by the exchange of sweets and the explosion of fireworks. As with other Indian festivals, Diwali signifies many different things to people across the country. In north India, Diwali celebrates Rama's homecoming, that is his return to Ayodhya after the defeat of Ravana and his coronation as king; in Gujarat, the festival honors Lakshmi, the goddess of wealth; and in Bengal, it is associated with the goddess Kali. Everywhere, it signifies the renewal of life, and accordingly it is common to wear new clothes on the day of the festival; similarly, it heralds the approach of winter and the beginning of the sowing season.
At another site...
Diwali is a festival of celebrations in India and among Indians all over the world. It is an occasion for happiness and togetherness. This is an occasion where everyone, irrespective of their religious and economic background celebrate Diwali. It teaches us to uphold the true values of life, to destroy ignorance that prevents humanity and to drive away darkness that engulfs the light of knowledge.
The word “Diwali” comes from the Sanskrit word “Deepavali”. “Deep” means light and “Avali” means a row, ie. A row of lights. Diwali is celebrated 20 days after Dussera, on New Moon Day. It is the last day of the year in the month of Ashwin or Aaso.
People show their happiness by lighting earthen diyas and decorating their houses with rangoli, bursting firecrackers and inviting family and friends for a feast. In Jainism, the lighting of lamps is symbolic of lighting the lamp within us. Just as a light brightens everything around it, our presence should brighten people around us – we should be of help to others and bring peace and happiness to ourselves and others. (PAL's note: this is the same culture that has a caste system.)
It marks the beginning of the Hindu New Year and as a brand new beginning for all. Diwali is celebrated for five days, each day has it’s own significance and myths.
More found here:
http://www.anekant.org/diwali.htm
