Holika Dahan also Kamudu pyre is celebrated by burning Holika, an asuri (demoness). For many traditions in Hinduism, Holi celebrates the victory of good over evil. According to the tradition, people contribute a piece of wood or two for the Holika bonfire, and this represents Holika being consumed by the fire in which she tried to kill her nephew Prahlad , a devotee of God Vishnu and thus Holi gets its name.

Why Holika Dahan is celebrated?
Fire burnt on the eve of Holi (Holika Dahan) symbolizes the burning of Holika. The story as a whole is testament to the power of devotion (bhakta) over the evil represented by King Hiranyakashyapu, as Prahlad never lost his faith.