The origin of the Sky lanterns in Thailand is connected to the beliefs of the Lanna people. It is believed that they must worship the Buddha relics, Phra That Kaew Chulamanee, on the fullmoon of the twelfth month. However, the relic is stored at the highest of heaven floors. In order for their prayers to reach the heaven, the Lanna people then used the sky lanterns to worship the Buddha relics during the festival. As the regulations on releasing sky lanterns have become very strict in recent years, people currently cannot release lanterns in the city.
Today, Lanna people decorate their house with lanterns and small candles (Phang Pratheep) during the festival period. The Lanna people believe that lighting of Phang Pratheep is the act of showing gratitude to all their benefactors. They are thankful of almost everything that benefits them such as the house and walls that protect them. The light of Phang Pratheep is also related to the enlightenment and prosperity.
The Yi Peng tradition is based on the same beliefs as the Loy Krathong tradition in other parts of Thailand. The main objective is asking for forgiveness from the Goddess Ganga. And to worship the Lord Buddha, which includes the sacred things according to Lanna beliefs.
According to yipenglanternfestival.in.th and thaizer.com