"Loi" means "to float". "Krathong" is a raft about a handspan in diameter traditionally made from a section of banana tree trunk, decorated with elaborately-folded banana leaves, flowers, candles, incense sticks etc.
People will cut their fingernails and hair and add them to the raft as a symbol of letting go of the bad parts of oneself. Many Thai believe that floating a krathong will create good luck, and they do it to honor and thank the Goddess of Water, Phra Mae Khongkha.
A multitude of Lanna-style sky lanterns (khom fai) are also launched into the air where they resemble large flocks of giant fluorescent jellyfish gracefully floating by through the skies. These are believed to help rid the locals of troubles and are also taken to decorate houses and streets.