It's pagan but religious none the less
Día de los Muertos or Day of the Dead, is also known as Fiesta de los Muertos. It is a holiday (or festival) which is celebrated in México, Central and South America, and in some areas of the United States, especially, the southwest. This holiday originates with the indigenous native pre-Hispanic peoples of México. These early people believed that the souls of the dead return each year to visit with their living relatives. When the Spaniards arrived in the early fifteen hundreds, they found well established native religions. The Aztec people held rituals that included the use of skulls. To the Aztec, skulls were used to symbolize death and rebirth. The Spanish priests perceived the rituals to be barbaric and pagan. The priests made an extreme attempt to assimilated indigenous people into the Catholic Church. Assimilation occasionally proved difficult when these people already had their own holy days.
The Aztec ritual was originally held in summer during the Aztec month of Miccailhuitontli, approximately corresponds to 24 July through 12 August. The Catholic Church moved the ritual to the beginning of November to coincide with two Catholic holidays, All Saints’ Day, a Christian Feast that honors and remembers all Christian saints, kept on the first of November, and All Souls Day, the commemoration of all the faithful departed, celebrated on the second of November.
The early Spaniards merged the ritual within the two Catholic holidays, in the hopes that Día de los Muertos would disappear forever. What has happened is that the traditional native holiday has become intermixed with the Catholic tradition but still exists.
Today, in many Méxican localities the first of November is the day for remembrance of deceased infants and children, often referred to as Día de los Angelitos or day of little angels. Those who have died as adults are honored on the second of November.
The Día de los Muertos fiesta varies somewhat by region and by degree of urbanization. In rural Mexico, people visit the cemeteries where their loved ones are interred. Home altars also take a major part in the festival. It is believed that the souls of the departed are attracted to the home altars made beautiful with flowers, baked goods, candies, fruits, and religious figures. The festivals are decorated with calaveras or skulls, animated figures of calacas or skeletons, and yellow-orange zempasuchils or marigolds.