Day of the Dead (Dia de los Muertos)
All Saints' Day, today, is a Catholic holiday that honors all the saints, known and unknown. Tomorrow is All Souls' Day, a Catholic holiday that honors all the “faithful departed”—in other words, all the Catholics who have died.
Day of the Dead connects with these two holidays for many Mexican and Mexican-American families. It is a day to pray for and remember friends and family members who have died. Many people take sugar skulls (yes, they are candy and can be eaten), marigolds, favorite foods and beverages, and memorabilia such as photos to graveyards. There people build altars or decorate the graves with these gifts.
Some people also build small shrines to the dead in their homes, visit one another, or even encourage children to knock on doors for small gifts of money and candy (which is very similar to trick-or-treating, and could be a passed-down influence). Parades and festivals are sometimes held.
Here and here are instructions for making skeleton and paper flower crafts and special Day-of-the-Dead foods.