The Sanskrit meaning of Deepawali is "Row of Lights". Diwali is one of the most enchanting festivals of India. Every Hindu house light up with a ceremonial display of lamps and fireworks. The belief is Diwali festival is supposed to lead every one of us to the light of knowledge from darkness.
Most Hindus in South, West and East believe the reason for celebrating Diwali is in tribute to the destruction of Demon King Narakasura by Lord Krishna. As Lord Krishna succeeded in killing Narakasura on a Chaturdasi (the fourteenth lunar day), hence Diwali is also known as Narakachaturdasi. The darkness of this Chaturdasi night is eradicated by using a lot lights and fireworks, so illumination is an integral part of this celebration.
There is also another belief that Diwali is also the birthday of Lakshmi and the legend Vishnu gave this festival to Vaisyas traders by tradition. So the most of merchant community of North and West, gather their family members in the worship room or in their business premises to perform the traditional Lakshmi Puja on the occasion of Diwali. People pray for prosperity and happiness in the coming year. This is because Diwali marks the beginning of New Year especially by the Hindu business community. They exchange gifts and celebrate Diwali in a great style in honor to the goddess of fortune. Some even take a final stocktaking previous day and start afresh for the coming year on this day. Even Stock Markets trade for sometime during this day and it's called as Diwali Trading.
Most hindus of North believe Diwali Festival marks the coronation of Lord Ram as the King of Ayodhya on his return to the kingdom with wife Sita and brother Laxman after 14 long years of exile and slaying of Ravana the demon King of Lanka. As the Hindus hold Lord Ram in high esteem, the festival of Diwali is celebrated with joy and charm that is unmatched in celebration with any other festival.
Even though the reason may differ from region to region the celebration is common everywhere. The state of Kerala is the lone exception where Diwali festival is less popular. In South most people take a special oil bath and a small pooja to ward off evil spirits before the grand celebration during that day. Another very interesting Diwali called "Thalai Diwali" is celebrated in South India.