The first day of Deepavali, the festival of lights is celebrated on the 14th day of the second fortnight of the seventh lunar month, Ashvayuja. It is called Naraka Chaturdashi and commemorates the slaying of the demon King Naraka.
Narakasura, the son of the demon king Hiranyaksha was born in the essence of the Earth Goddess. He had committed outrage against thousands of women including the mother of the gods, Goddess Aditi.

According to Srimad Bhagavatam, he had obtained, through penance to Lord Shiva, a boon that he could only be killed by his mother. Believing that he was immortal because his own mother would never kill him, he kidnapped thousands of princesses and goddesses. However, Lord Vishnu found a loophole and struck at him in his Krishna avatara. The Earth Goddess took birth as a Yadava princess - Satyabhama and married Lord Krishna. Since Narakasura was born in the essence of the Earth Goddess, he was spiritually a son of Bhudevi. Goddess Satyabhama killed Narakasura using Lord Krishna's Sudarshana Chakra. Symbolically, this can be viewed as a reminder that Naraka (hell) can only be defeated by Satya (truth).

According to Padma Purana, Narakasura, through penance to Lord Shiva obtained a boon that he could only be killed when he himself invited death. Thinking that his immortality was secured, he committed outrage against thousands of women. To end his menace, Goddess Parvati took the avatar of Kamakhya and approached Narakasura. The demon, smitten by the goddess's beauty asked her to come closer to him. The incarnation of the primeval power Shakti, Goddess Kamakhya took this as an invitation and slayed him. 
Both the stories hail the feminine power in the destruction of lust and greed. This day symbolizes the defeat of evil and victory of good. 
The festival of lights is essentially the manifestation of triumph of good over evil, abnegation over greed, prosperity over ruin, knowledge over ignorance..... light over darkness.

People take oil bath, traditionally called Abhyanjana on this day. All houses are decorated with lights and lamps. People burst firecrackers. Sweets are distributed and joy is shared. Preparations are made for Lakshmi puja which will take place the next day.