Dia de los Muertos as we know it today is a mash up of Spanish Catholic traditions and indigenous beliefs, all rolled up together to create a brilliant and beautiful celebration of life, love, and family. Is it macabre? Sure! But that's not a bad thing.
As we've talked about before, the belief of creation is that no one thing can exist without another sacrificing itself. We are not here without our ancestors sacrifice for us, and so we sing and dance and party with them once a year to remember.