Diwali is a festival that takes place on the 13th day of the month of Ashwin in the Hindu calendar, which makes it somewhere in October or November depending on the year. This year, Diwali will start November 13th and last five days.
Although there are a few different beliefs in India about the origins of the festival, most people believe the lights invite the Goddess of Fortune and Wealth (Lakshmi Pooja). It is an opportunity for a clean slate, houses are cleaned and scrubbed, accounts are settled, forgiven, or simply reviewed, and new clothes and things are bought and worn.
The main decoration is a lot of lights, but you can see a lot of tiny oil clay lamps (diwas) all over inside and out of houses. Fireworks, firecrackers, flowers, and sweets are shared by the family. Rangolis (floor decorations made of rice and sand) are a nice craft to try with the kids.
A few good resources:
• National Geographic has an interesting kids focused article.
• Activity Village has a nice article along with printable coloring pages, and instruction for making different crafts.
• KidsGen has a very nicely made site full of resources such as the history, recipes, decoration ideas, crafts and so much more.
• The Huffington Post has an interesting article about Diwali being more and more celebrated in the American culture.
• Pinterest user Prismmahas compiled a board on Diwali decoration ideas.