[1] There is no Diwali celebration in the Ashram. As the Mother used to give Darshan marking it as Kali Puja. If we wish to, we can observe it quietly lighting earthen lamps (diyas) and reading the passages on Mahakali from the book, the Mother and try to mould ourselves accordingly.
[2] The significance of festivals is partly to hold a group of people in common solidarity through custom, culture and tradition. Partly it served to preserve a teaching through the intellectual memory and vital layers of the race by engaging these parts also in a knowledge that is too high and vast for the average common man.
But most are naturally outgrowing it. Those who still want to continue, it is upto them but at least it should be done with an eye on aesthetics and basic sensitivity towards others who may not enjoy the smirching of colours or the loud bang of crackers. These are anyways later distortions and have nothing to do with the original festival and are often in contradiction with its spirit. They turn out more often a means of catharsis of certain repressed energies of a rather low order. There is very little utility beyond it.
Affectionately,
Alok Da