Loy is "to float" and Krathong is a "leaf cup" usually made of banana leaf as one often sees in the market. The leaf cup is used to hold something. Loy Krathong is, therefore, the floating of lights in a leaf cup. During October and November, all the rivers and canals in the lowlands are flooded and the waters in some places overflow their banks. The rainy season is now in a sense over. It is the time of rejoicing for the weather is fair after the rains.
In this video, 100,000 illuminated rafts fill the Mae Klong River. http://www.thailandlife.com/loykrathong.html