From Bulbapedia, the community-driven Pokémon encyclopedia.
The Summer Festival is a holiday celebrated near Maiden's Peak, as well as other locations in the Pokémon world. In the anime dub, it was said to celebrate the end of Summer, but in actuality, it is based on Natsu matsuri, a Shinto festival celebrating the beginning of Summer.
Like in the real world, people participating in the Summer Festival are encouraged to wear Yukata, brightly colored and patterned garments. Various performances are held in the evening, and carnival-style games and foods are located at the festival. The festival grounds are decorated with bonfires and paper lanterns. Tiny decorated boats lit with candles are floated across bodies of water to guide the spirits of the dead.