Holika Dahan also Kamudu pyre is celebrated by burning Holika, an asura. For many traditions in Hinduism, Holi celebrates the killing of Holika by Vishnu in order to save Prahlad, a devotee of God Vishnu in the city of Multan Pakistan, and thus Holi gets its name. In olden days, people used to 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 Prahalad.
The night before Holi, pyres are burnt in North India, Nepal and parts of South India in keeping with this tradition. The youth playfully steal all sorts of things and put them in Holika pyre.
In some parts of India the day is actually called Holika Dehan. There are other activities associated with the story of Prahlad, but the burning of Holika is the one that we can most directly associate with Holi. 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