O-bon is a Buddhist observance honoring the ancestral spirits. Traditionally, the ancestral spirits are said to return to the family alter on the 13th of July in some areas, August in others, and to depart once again on the 16th. The rituals practiced to welcome and send off the ancestral spirits vary from region to region. Because it is believed that the sprits of the ancestors need to have their way illuminated to guide them, lanterns or small straw fires may be lit at the entrance to the home to welcome them (mukaebi) and later to send them on their way (okuribi). Other practices include taking offerings to the family tomb and floating lanterns down a river or in a lake or the ocean (known as shoryo nagashi or toro nagashi). It is customary at this time to visit the family grave, clean it, and present fresh flowers and incense. Okuribi and mukaebi are not as common these days, but many families do gather to visit the family grave.
Many companies close over the O-bon holidays from the 13th to the 16th of August, and numerous Japanese take this opportunity to visit the family homestead or take a family trip; thus, highway, train, and air traffic are usually quite congested over these holidays. In recent years, however, companies have begun to stagger their summer vacations, and this has helped to relieve the congestion somewhat.
Nihon matsuri to nenju gyoji jiten [Encyclopedia of Japanese festivals and annual events].Edited by Kurabayashi Masaji. Ofusha, 1983.
Encyclopedia of Japan, Kodansha International, 1999
The Japan Forum Newsletter No.13, "A Day in the Life: Obon-yasumi"