Obon is one of the most important Japanese traditions. People believe that their ancestors' spirits come back to their homes to be reunited with their family during Obon and pray for the spirits. For the reason, Obon is an important family gathering time, and many people return to their hometowns.
Obon was originally celebrated around the 15th day of the seventh month in the lunar calendar. Obon periods are nowadays different in various regions of Japan.
In most regions, Obon is celebrated around August 15, and it typically begins 13th and ends 16th of August. In some areas in Tokyo, Obon is celebrated around July 15, and it is still celebrated on the 15th day of the seventh month in the lunar calendar in many areas in Okinawa.
Japanese people clean their houses and place a variety of food offerings such as vegetables and fruits to the spirits of ancestors in front of a butsudan (Buddhist altar). Chochin lanterns and arrangements of flowers are usually placed by the butsudan.
On the first day of Obon, chochin lanterns are lit inside houses, and people go to their family's grave to call their ancestors' spirits back home. It's called mukae-bon. In some regions, fires called mukae-bi are lit at the entrances of houses to guide the spirits. On the last day, people bring the ancestor's spirits back to the grave, hanging chochin painted with the family crest to guide the spirits.
It's called okuri-bon. In some regions, fires called okuri-bi are lit at entrances of houses to send the ancestors' spirits. During Obon, the smell of senko incense fills Japanese houses and cemeteries.
Toro nagashi (floating lanterns) is a tradition often observed during Obon. People send off their ancestors' spirits with the lanterns, lit by a candle inside and floated down a river to the ocean.
Also, bon odori (folk dance) is widely practiced on Obon nights. Styles of dance vary from area to area but usually Japanese taiko drums keep the rhythms. People go to their neighborhood bon odori held at parks, gardens, shrines, or temples, wearing yukata (summer kimono) and dance around a yagura stage. Anyone can participate in bon odori, so join the circle and imitate what others are doing.
Obon is not a Japanese national holiday, but many people take vacations during this time. Mid-August is the peak travel season in summer.