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[Some Episcopalian (e.g. Protestant) perspective.]
Since the eigth century Christians have celebrated All Saints' Day on November 1 to celebrate the known and unknown Christian Saints. Saints are not just those whom the Church has canonized, but all members of that "cloud of witnesses" who proclaim Jesus as Lord - including you and me!
Almost as old as the celebration of All Saints' Day is the tradition associated with All Hallow's Eve. ("Hallows" mean "saints," both mean "holy ones." As in "Hallowed be thy name.") So, Halloween means "the evening before All Holy Ones' Day." Today we call that festival Halloween and we have many secular ways of recognizing it. However, it's important to remember that its celebration has a long, positive history in the Church.
What sort of history is that? Like many of our liturgical festivals (Christmas and Easter included), All Saints' Day and All Hallow's Eve have some connection to pagan festivals. People of many races and cultures have remembered their dead and have had superstitions about death itself. Christians remembered death itself on All Hallow's Eve and celebrated Christ's victory over death. During the Middle Ages, Christians would gather in Churches for worship and they would remember the saints' victories over evil. Likewise they would put on little displays showing Jesus' victory of Satan, often using unusual masks and costumes to act out the story.
Thus, the festivities on All Hallow's Eve was the Christian's way of laughing at death and evil, something we can do in certain hope of Christ's victory over the powers of darkness. The Church for centuries, however, has seen All Hallow's Eve not as a glorification of evil, but as a chance to affirm eternal life in the face of the death of our mortal bodies.