There are many different beliefs about the origin of the Lantern Festival. But one thing for sure is that it had something to do with celebrating and cultivating positive relationship between people, families, nature and the higher beings they believed were responsible for bringing/returning the light each year.
One legend tells us that it was a time to worship Taiyi（太乙真人）, the God of Heaven in ancient times. The belief was that the God of Heaven controlled the destiny of the human world. He had sixteen dragons at his beck and call and he decided when to inflict drought, storms, famine or pestilence upon human beings. Beginning with Qinshihuang, the first emperor to unite the country, all the emperors ordered splendid ceremonies each year. The emperor would ask Taiyi to bring favorable weather and good health to him and his people. Emperor Wudi of the Han Dynasty directed special attention to this event. In 104 BC, he proclaimed it as one of the most important celebrations and the ceremony would last throughout the night. They clean it all up in the morning.
Another legend associates the Lantern Festival with Taoism. Tianguan is the Taoist god responsible for good fortune. His birthday falls on the 15th day of the first lunar month. It is said that Tianguan likes all types of entertainment, so followers prepare various kinds of activities during which they pray for good fortune.
Yet another common legend dealing with the origins of the Lantern Festival speaks of a beautiful bird that flew down to earth from heaven, which was hunted and killed by some villagers. This angered the Jade Emperor in Heaven because the bird was his favorite one. Therefore, he planned a storm of fire to destroy the village on the 15th lunar day. The Jade Emperor’s daughter heard of this plan, and warned the villagers of her father’s plan to destroy their village. The village was in turmoil because nobody knew how should they escape their imminent destruction.
However, a wise man from another village suggested that every family should hang red lanterns around their houses, set up bonfires on the streets, and explode firecrackers on the 14th, 15th, and 16th lunar days. This would give the village the appearance of being on fire to the Jade Emperor. On the 15th lunar day, troops sent down from heaven whose mission was to destroy the village saw that the village was already ablaze, and returned to heaven to report to the Jade Emperor. Satisfied, the Jade Emperor decided not to burn down the village. From that day on, people celebrate the anniversary on the 15th lunar day every year by carrying red lanterns on the streets and exploding firecrackers and fireworks.