Diwali is one of the most popular festivals, though not the most important. It is celebrated across India. The reason it is so popular because it is fun festival. Though it is a Hindu festival, people of all religions celebrate it.
People buy new clothes to wear. Distribute sweets and savouries in neighbourhood (both home-made and bought from shop). Crackers are burst at night.
Different regions in India celebrate it for different reasons. Most ppl in Northern India celebrate to mark the return of Lord Ram from his 14 yrs exile. Most ppl in Southern India celebrate it coz on this day Lord Krishna killed a demon who had imprisoned all women.