Halloween, or All Hallow's Eve, is actually a Pagan Holiday, where they celebrated the end of Summer. The Pagans believed that on this new year, however, that time stood still for the gods, and evil spirits, demons, and the souls of the people who died during the previous year could escape to Earth and try to take-over, inhabit, or otherwise use another person's body as their own, so that they could return to life.
It was common practice to turn off their lighting (candles and fires) and dress up in order to trick the spirits and keep them from entering their bodies.
They called this whole ritual (the celebration and dressing up) as Samhain.
The Christians, never really ever able to rid the world of Pagan beliefs, simply incorporated them into their own religion. For example, Christmas is another Pagan holiday, Winter Solstice. WS now takes place on December 22nd, but due to the Earth's wobble, it used to be on the 25th (at the time Christianity took it over), and also used to be on what is now January 1st, what we consider New Year's now, also due to the Christian Calendar.
It's a shame that in all their efforts to try to teach good and right, that modern day Christians do it by lying.