Diwali, known as the 'festival of lights', is a significant holiday in India celebrated by Hindus and Sikhs, marking the new year and honoring the goddess Lakshmi. The festival symbolizes the victory of good over evil and involves various customs such as cleaning homes, decorating with lights, and lighting lamps to welcome Lakshmi. Different regions celebrate Diwali with unique legends, including the return of Rama and Sita in northern India and the victory of Lord Krishna in Nepal.