It is believed that it started about two thousand years back, in Ireland, northern France and the United Kingdom among a set of people called the Celts. Agriculture was their main occupation, and they considered 31st of October to be a major day, being the end of their harvesting season. It was their new year’s eve, and they named this festival after the Lord of Darkness or the Dead, calling it "Samhain". Celtic priests (the druids), presided over these festive gatherings.
During those days, people considered winter to be the time of human death. Consequently this festive season, marking the start of winter with the ending of the summer started to get associated with the breaking of the boundary between with the dead and the living world. This particular night of 31st of October was regarded as the night when ghosts returned to the living planet as the boundary between the two worlds blurred.
This was considered to be an excellent time for predicating future, and thus the druids started to predict future, which proved to be a great sooner of comfort for the Celts during the frightening dark winter months.
If you wish to know how did Halloween start, and from where did the concept of dressing up in Halloween costumes originate, then it would be helpful to mention that as Celts celebrated their festival, the burnt crops while offering animal sacrifices in order to please their gods. They dressed up including animal skins and costumes in their costumes to add to this mood. This was the beginning of the concept of dressing up in what we call today as Halloween costumes.
Eventually the Romans conquered the Celts, and two of their festivals got combined with this Celtic festival. Gradually with the passage if time the influence of the Christian culture started to dominate their lands, and in some time this festival got replaced by a Christian holiday termed as the All Saints' Day.
This festival, though somewhat different form the Celt festival, was not a completely different concept. For instance, even this festival revolved around the deceased and was subject to various supernatural elements. Being a festival for honoring the martyrs and the saints, it did not quite change the basic essence, around which it originally had revolved.
Most experts, when asked how did Halloween start and how was it named, say that the name ‘Halloween’ came from this combined celebration, which became popular as All-hallowmas or All-hallows, with the night of Samhain in particular being called as the All-hallows Eve.
A lot of fun Halloween facts and superstitions came up during this time. However, during that period Halloween myths were more regarded very seriously, and were led by staunch believers, unlike the modern days, where we consider them more for the fun aspect involved.
Though a number of doubts still exist and certain theories remain unproved to perfectly answer the question ‘how did Halloween start ’, general views suggest the Celtic involvement. Needless to say, Halloween sure remains one spooky subject!