Calaveras de azcar ("sugar skulls") are used to adorn altars (and can be eaten!) in conjunction with the Mexican celebration of the Day of the Dead.
Day of the Dead (Dia de Muertos) is a holiday focuses on gatherings of family and friends to pray for and remember friends and family members who have died. It is particularly celebrated in Mexico, where it is a national holiday, and all banks are closed. The celebration takes place on November 1 and 2, in connection with the Catholic holidays of All Saints' Day and All Souls' Day. Traditions connected with the holiday include building private altars honoring the deceased using sugar skulls, marigolds, and the favorite foods and beverages of the departed and visiting graves with these as gifts.
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