Holi is a widely popular festival of colours celebrated in India. It is a festival of the Hindus but people belonging to the other religions also enjoy celebrating holi and having fun with the colours.
Holi falls somewhere in the spring season in the month of Falgun (March). It is the festival which generally falls on a full moon in March. This festival is basically celebrated very elaborately in North India.
The story behind the festival is, that there was a king - Hiranyakashyap, his sister- Holika and his son- Prahlad, who was spiritually devoted to God. Hiranyakashyap was worshipped by everyone but his own son. His own son refused to worship anybody other than God, which infuriated him so he planned to kill his own son. He assigned the duty of killing his son to Holika since she was given a boon by God of not dying in fire, land or sky, at day or night and by a animal or human. So, basically it was impossible for a human, animal or even a natural calamity to kill Holika. Hence, she got Prahlad to sit on her lap inside flames. That day, God himself came down to save his true follower- Prahlad from the injustice. The sky was half of a sunset and half a sunrise, God was it in the avatar of "Narsinha"- with upper half of a lion and the lower half of of a human being and he kept Holika on his lap which was neither in the sky nor on the land. He killed her with his lion paws. This marked the day as a day of celebration and also marks the triumph of good over evil.
People play with colours and water on this day, have sweets and spend the day with family and friends.