According to mythology, the festival celebrates the killing of Holika, the sister of Hrinyakashyapu.
Holika Dahan is celebrated a day before Holi. In large parts of India, the festival is celebrated with a lot of colors, water balloons and water guns
Choosing right Muhurta for Holika Dahan is more important than choosing right Muhurta for any other festivals. For other festivals doing puja at wrong time will not bring puja benefits but doing Holika Dahan at wrong time would bring suffering and misfortune.