Holi is being celebrated in the Indian Subcontinent even before the time of Rama and Krishna. It's an ancient festival- far more ancient than Diwali, therefore the festival has a lot of importance. And, There are couple of reasons which the "Generation Now" knows ...
First of all - It's fun to smear Colors on every body's faces- make them look like Clowns (including your own self). It's also fun to grove on what the DJ is playing at the Rain Dance party. Secondly, Some people also try Bhang mixed with Thandai and it's super fun to watch them act all wonked out.... Thirdly, Holi is a National Holiday and its always nice to meet friends & family & also get to eat amazingly delicious food.
And, despite knowing that harmful chemicals are present in the various colors used, we don't really care... Simply because if we can live in so much pollution-breath in harmful gases everyday and Survive even after eating all kinds of pesticide Laden food, then Holi also turns out to be the time to test our Immunity :)
However, other than the above mentioned there many more interesting and age old reasons why people play with colors on Holi in different parts of India :
1) Agricultural :
It is the advent of Spring and Flowers are Blooming everywhere. There is a Freshness in the Air, the Weather is Pleasant in most parts of the country making you feel Rejuvenated and Optimistic. The Gloomy, Lazy Winters are gone and here is the time to enjoy the Sunny Pleasant air around. Being an Agricultural Festival Holi Symbolizes the beginning of a new Season and Hopes of a big Harvest. This is also the Time when we Remember the Rain God- Indra for Blessing our Crops and overall Prosperity.
2) Mythology :
a) Holika Dahan
Many years ago there lived a Demon King called Hiranyakashyap who had the boon of immortality given to him by Lord Brahma. But, the more powerful he became he also became more and more arrogant. He wanted people to pray him and not pray God. But, his own son Prahlad was a devotee of Lord Vishnu. The Demon King tried all that he could to stop Prahlad from praying his enemy Vishnu but the boys Faith only increased. Eventually, sick of his son's ways Hiranyakashyap ordered his sister to sit on a pyre with Prahlad in her Lap. Holika was blessed with a shawl, which would prevent the fire from harming her and would instead only burn Prahlad. The Little boy prayed to Lord Vishnu to save him. Not only did Prahlad was saved but Holika instead was burnt to death. Since that time, the burning of Holika is an important part of Holi celebrations, signifying the victory of Good over Evil.
After Lord Shiva got to know of Goddess Sati’s Immolation, he renounced all worldly duties and went into a deep meditation. The world’s balance started to crumble in his absence and Sati took rebirth as Goddess Parvati. She tired to win Lord Shiva’s Heart and wake him up from his trance however, Goddess Parvati failed in her endeavors. Then she requested Kamadev- the God of Love, to help her. Disturbed by Kamadev’s Love arrow, Lord Shiva opened his 3rd Eye that fired anger and Kamadev was reduced to ashes. It is said that it was the Day of HOLI when Kamdev had sacrificed himself for the good of all beings. Later, when Lord Shiva realized his mistake, he granted Kamadev immortality in an invisible form. This Legend also gave birth to the custom of offering sandalwood paste to Kamadev on Holi, to assuage the stinging burns.
c) Fable of Ogress Dhundhi
Dhundhi an Ogress consumed innocent children in the kingdom of Prithu. She had a boon from Lord Shiva that she would not be killed by Gods or Men, nor suffer from Arms or from Heat, Cold or Rain. Though these boons made her invincible but her weak point was a curse by Lord Shiva- that she would be in danger from Boys going Rowdy and Crazy. Ultimately, it was the Pranks by Children on Holi that chased her away. This is also why Rowdy behavior like throwing Water and smearing colors by kids is considered acceptable in many parts of the country on Holi.
d) Story of Radha & Krishna
In Vrindavan and Mathura, Holi is celebrated for 16 days in the memory of the divine love of Radha and Krishna. It's believed when Lord Shri Krishna was young, he often complained to Mother Yashoda about his dark complexion and wondered why Radha was so fair. One day, his mother playfully suggested that he can smear color on Radha’s face and change her complexion to any color he wanted. Fascinated by the idea, Krishna smeared Radha’s face with colors introducing the colorful festival of Holi. Owing to this history, the festival of Holi, even today retains its flavor of naughtiness: smearing your loved one with bright colors and playing pranks on each other. Youngsters also engage in singing and dancing which is reminiscent of Shri Krishna’s Raas-leela with Radha and the gopis, during his time.playing Holi on the banks of the river Yamuna with Radha and other Gopis.The celebrations officially usher in spring, the celebrated season of love.