I enjoyed Lantern Festival in Taiwan growing up. It was very simple but fun. We would get a lantern, light it up, and walk around outside. That was extent of what we did, although I believe there is more to the holiday. Here is a picture of my sister and I (please excuse the moldy mess) getting ready to show off our lanterns.
In honor of Lantern Festival we made our own paper lanterns. It is an easy craft. Decorate a piece of paper. Cut off a strip on the short side. Fold in half long ways and cut along the fold, stopping an inch from the other edge. Open it up and roll it together like an accordion. Tape the edges together. Tape the strip to top for a handle. Here are the girls showing off their lanterns.
We also watched lanterns being released into the night in Taiwan on youtube. So pretty. I recommended checking it out if you have never seen it. I hope to see it in real life some day.