DURING July and August, after the last raindrops of spring have given way to blazing sunshine, many Japanese take up an old tradition by gathering in their hometowns to pay homage in a festive way to their ancestors.According to common belief, the spirits of ancestors come back home during this period called Obon, a time set aside to appreciate life and one's heritage. Obon festivals range in style from the solemn to the spry, from quiet visits to family graves to lively dancing and parades of floats, fireworks, or paper boats drifting down a river. The origins of the festivals lie in Shinto, a native Japanese "way of life" that celebrates nature. No matter how different these festivals may be across Japan, one indispensable icon is the paper lantern - of almost any size. One of the biggest lantern displays takes place during the mitama (spirit) festival at the Yasukuni Shrine in Tokyo. At night, the shrine's long, wide walkway is lit by a wall of yellow lanterns of different sizes. The tall rows of small lanterns are donated by individuals. Famous sumo wrestlers, kabuki actors, and other celebrities write messages on the lanterns in Japanese calligraphy. "The biggest lanterns come from festivals around the country to comfort the spirits by reminding them of their home to wn," explains Tadamasa Hanada, a Shinto priest at the Yasukuni Shrine. Much of the activity at Japanese festivals takes place in the booths selling fireworks, goldfish, sweets, crafts, and other festival staples. The celebration incites curiosity in the young and nostalgia in the old. The mitama festival at Yasukuni is considered the most important of Obon festivals in Japan. The shrine was erected in 1869 by the Meiji emperor after the overthrow of shogun rule. But it has become the center of frequent domestic and international controversy: It also serves as the national shrine honoring 2.5 million of Japan's war dead, including seven "war criminals" convicted at an international trial after World War II. In addition to honoring Japanese ancestors, the shrine also honors foreign war victims, including former enemies of Japan. Such openness comes naturally to Shinto believers, who respect what they call "good" and "mischievous" spirits equally. Everyone and everything - from an acorn to a mountain - deserves respect. "Shinto is a way of life for Japanese," says Mr. Hanada. "It's hard to explain in words because it involves a whole spectrum of Japanese culture and everyday life. "I may be saying this because I'm a [Shinto] priest," says Hanada, "but I think the core of Shinto belief is very peaceful. Ancestor worship gives us a moral sense because even if we are physically alone, we know that the spirits of our ancestors are watching us, preventing us from doing evil. Certainly, there have been times when such qualities were not realized, but we need to remind ourselves to thank our ancestors and respect our surroundings for the peace we enjoy, and the very fact that we are aliv e." Hanada acknowledges that fewer and fewer Japanese are visiting Shinto shrines regularly. "The younger generation may have fewer attachments to traditional community values, but I hope that these festivals will remain as a childhood memory in young people. "There will come a time in the future for them to think about what it is to be Japanese," he says.