Although your conclusions may vary, the Day of the Dead seems to me like a combination of our American Halloween and Memorial Day.
The Day of the Dead (Día de los Difuntos or Día de los Muertos in Spanish) is a holiday celebrated mainly in Mexico and the Mexican immigrant community living in the United States, with variations of it also observed in other Latin American countries and other parts of the world. The Mexican celebration occurs on November 1 (All Saints' Day) and November 2 (All Souls Day).
Though the subject matter may be considered morbid from the perspective of some other cultures, celebrants typically approach the Day of the Dead joyfully...the traditional mood is much brighter with emphasis on celebrating and honoring the lives of the deceased, and celebrating the continuation of life; the belief is not that death is the end, but rather the beginning of a new stage in life.
During the Days of the Dead families usually clean and decorate the graves where their loved ones are buried, decorating them with ofrendas, or offerings, which often include orange marigold. These flowers are thought to attract souls of the dead to the offerings. Toys are brought for dead children (los angelitos, or little angels), and bottles of tequila, mezcal, pulque, or atole for adults. Families will also offer trinkets or the deceased's favorite candies on the grave.
Ofrendas are also put in homes, usually with foods such as candied pumpkin, pan de muerto ("bread of the dead") or sugar skulls and beverages such as atole. The ofrendas are left out in the homes as a welcoming gesture for the deceased. Some people believe the spirits of the dead eat the "spiritual essence" of the ofrenda food, so even though the celebrators eat the food after the festivity, they believe it lacks nutritional value. The pillows and blankets are left out so that the deceased can rest after their long journey. Traditionally, families spend some time around the altar praying and telling anecdotes about the deceased. (Loosely quoted from the "Day of the Dead" Wikipedia entry.)
While I'm much too far from my deceased loved ones to take an offering to their graves (and, as previously discussed, cemeteries skeeve me out), after doing a little research I decided the sugar skulls would be kinda fun.
And making them was surprisingly much easier than it looks. I ordered the skull molds here (I got the original large skull and the sombrero hat pack) and they came with fabulous instructions. (And if you're up for a laugh there are slightly more humorous instructions--dictated by a sock monkey--here.) The only part that was remotely tricky was the hat brims. They were a little less stable because of the hole in the center, but I eventually got two to set up. Really, don't be scared off because it looks complicated; I can't make chocolate chip cookies, and I made these.
After letting the skulls dry for a few days, I mixed up some little paint pots'o'icing and pretty much just went wild decorating. Again, it was pretty idiot proof--I used gel icing colors (not the regular food coloring you buy at the grocery story), two icing tips that came together in a set (one plain and one for making flowers), and regular old plastic bags with the corner snipped off.
The icing sets up really hard and the skull part is very solid also. (Moe pulled one off the table when I wasn't looking and it didn't hurt it at all.) I don't know if I will, but I think you could easily make a set, wrap it up carefully, and use it year after year.
Happy Dia de los Muertos!
(Oh, I almost forgot, check out this post on BlogHer for some other neat Dia de los Muertos ideas!)