Japanese used the lunar calendar for many centuries, and the Bon was the event of mid-August in the lunar calendar. In the east of Japan, particularly in Tokyo, July 13-16 in the current solar calendar is the Bon week, whereas people in the western part of Japan take the Bon holidays during the week of August 13-16. In a climatological viewpoint, the July week is more like the time of old Bon, but the Bon and August have been connected in the most of Japanese history. Many contemporary Japanese people experience traditional things during this Bon week.
I thought that Bon was entirely the Buddhism event and people temporally receive the soul of dead people of their family to their house, but according to an essay on the Bon written by Hiro Sachiya, which I recently read in the magazine of Hitotoki, Bon is more likely the Shinto (animistic old Japanese religion, symbolized by its orange color gates and the shrines surrounded by the forest) event or at least a great deal mixed with the Shinto idea.
For ancient Japanese, two kinds of the souls of dead people existed, according to the author. One was the Hotoke, rough soul (Ara-mitama) and still not tranquilized. The other was Kami, already harmonious soul (Niki-mitama). People thought that the dead soul Hotoke was rough before finishing the 33 rounds of death anniversary. During the Bon, people thus receive the rough Hotoke soul at their house on August 13. The Hotoke is also called Syo-ryou(extracts of the soul). People must entertain the Syo-ryo soul by vegetarian food (compromised, but no warm blood animal meat).
In the new year, people receive the soul of harmonious Kami that is the soul that finished the 33 rounds of the death anniversary. The kadomatsu (specially decorated pine tree gate) is the sign for the welcome to Kami in the new year. New year is therefore tranquil, while Bon is active. Dancing for the new year is quiet, consisting of movements lateral to the ground, while dancing during the Bon (Bon odori) consists of vertical movements.
In August 16, the soul of Hotoke will go back to their world either over the sea or over the sky. Ancient Japanese, who were island people like us, thought that the world for dead people existed either behind the sky or beyond the sea.
In the Daimonji-yaki, the festival of August 16 night, people put fires on the five mountains in Kyoto, which intend to bring the light for Hotoke to be able to go back to the sky. This fire ceremony is the most impressive one. In Tomyonagashi, on the other hand, people especially children, make small boats that carry the candles and bring them to the water front for the soul of Hotoke to go back to their world over the sea.
The current average Japanese are least religious in the advanced countries, like English or Dutch, but they still subconsciously experience the Shinto-Buddhism mixed religious event such as the Bon and the New Year (Syogatsu), simply by taking holidays for the family to get-together.
By the way, I have no faith in the world after my own death, and do not fell jealous to people who believe in it.