I am not sure of the exact story, but they started launching sky lanterns in Pingxi, because it was a secluded area. It began to have lots of crime after Han had settled there. So they would launch sky lanterns to either let people know there was a bandit attack, or it was to let people know that they were safe. This event eventually became a large scale festival when the coal mines closed in the late twentieth century and the villagers need a new income.
Jake and I bought one of our own after watching thousands of other people send their own up. ($3US).
The whole night kinda felt like this...
...but without the girl