The main day, Holi, also known as Dhuli Vandana in Sanskrit,also Dhulheti, Dhulandi or Dhulendi, is celebrated by people throwing coloured powder and coloured water at each other. Bonfires are lit the day before, also known as Holika Dahan (burning of Holika) or Chhoti Holi (little Holi). The bonfires are lit in memory of the miraculous escape that young Prahlad accomplished when Demoness Holika, sister of Hiranyakashipu, carried him into the fire. Holika was burnt but Prahlad, a staunch devotee of god Vishnu, escaped without any injuries due to his unshakable devotion. Holika Dahan is referred to as Kama Dahanam in South India.
Holi is celebrated at the end of the winter season on the last full moon day of the lunar month Phalguna (February/March), (Phalgun Purnima), which usually falls in the later part of February or March.
This Year 2012 Holi Holi (Dhulandi) on March 8 and Holika Dahan on March 7
Rangapanchami occurs a few days later on a Panchami (fifth day of the full moon), marking the end of festivities involving colours.
In Vaishnava Theology, Hiranyakashipu is the great king of demons, and he had been granted a boon by Brahma, which made it almost impossible for him to be killed. The boon was due to his long penance, after which he had demanded that he not be killed "during day or night; inside the home or outside, not on earth or on sky; neither by a man nor an animal; neither by astra nor by shastra". Consequently, he grew arrogant and attacked the Heavens and the Earth. He demanded that people stop worshipping gods and start praying to him.
Despite this, Hiranyakashipu's own son, Prahlada, was a devotee of Lord Vishnu. In spite of several threats from Hiranyakashipu, Prahlada continued offering prayers to Lord Vishnu. He was poisoned but the poison turned to nectar in his mouth. He was ordered to be trampled by elephants yet remained unharmed. He was put in a room with hungry, poisonous snakes and survived. All of Hiranyakashipu's attempts to kill his son failed. Finally, he ordered young Prahlada to sit on a pyre on the lap of his demoness sister, Holika, who could not die because she also had a boon which would prevent fire from burning her. Prahlada readily accepted his father's orders, and prayed to Vishnu to keep him safe. When the fire started, everyone watched in amazement as Holika burnt to death, while Prahlada survived unharmed, the burning of Holika is celebrated as Holi.
In Vrindavan and Mathura, where Lord Krishna grew up, the festival is celebrated for 16 days (until Rangpanchmi) in commemoration of the divine love of Radha for Krishna. Lord Krishna is believed to have popularized the festival by playing pranks on the gopis here. Krishna is believed to have complained to his mother about the contrast between his dark skin complexion and Radha's (Shakti or energy that drives the world) fair skin complexion. Krishna's mother decided to apply colour to Radha's face. The celebrations officially usher in spring, the celebrated season of love.
There is alternative story detailing the origin of Holi. This story is about Kamadeva, a god of love. Kama's body was destroyed when he shot his weapon at Shiva in order to disrupt his meditation and help Parvati to marry Shiva. Shiva then opened his third eye, the gaze of which was so powerful that Kama's body was reduced to ashes. For the sake of Kama's wife Rati (passion), Shiva restored him, but only as a mental image, representing the true emotional and spiritual state of love rather than physical lust. The Holi bonfire is believed to be celebrated in commemoration of this event.