Origin
Obon is a shortened form of Ullambana (Japanese: 于蘭盆會 or 盂蘭盆會, urabon'e). It is Sanskrit for "hanging upside down" and implies great suffering. The Japanese believe they should ameliorate the suffering of the "Urabanna".
Bon Odori originates from the story of Maha Maudgalyayana (Mokuren), a disciple of the Buddha, who used his supernatural powers to look upon his deceased mother. He discovered she had fallen into the Realm of Hungry Ghosts and was suffering. Greatly disturbed, he went to the Buddha and asked how he could release his mother from this realm. Buddha instructed him to make offerings to the many Buddhist monks who had just completed their summer retreat, on the fifteenth day of the seventh month. The disciple did this and, thus, saw his mother's release. He also began to see the true nature of her past unselfishness and the many sacrifices that she had made for him. The disciple, happy because of his mother's release and grateful for his mother's kindness, danced with joy. From this dance of joy comes Bon Odori or "Bon Dance", a time in which ancestors and their sacrifices are remembered and appreciated. See also: Ullambana Sutra.
As Obon occurs in the heat of the summer, participants traditionally wear yukata, or light cotton kimonos. Many Obon celebrations include a huge carnival with rides, games, and summer festival food like watermelon.
The festival ends with Toro Nagashi, or the floating of lanterns. Paper lanterns are illuminated and then floated down rivers symbolically signaling the ancestral spirits' return to the world of the dead. This ceremony usually culminates in a fireworks display.
Read more about this topic: Bon Festival
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