The word Eid occurs in the Qur'an once meaning a joyous recurring occasion. Man has celebrated festivals ever since he knew communal life. Ancient Egyptians had one called the day of adornment. Eid ul Fitr is the festival that marks the end of the month of Ramadhan. Fitr means to break and it therefore marks the breaking of the fasting period and of all evil habits.
Happiness is observed at attaining spiritual upliftment after a month of fasting.
He has also said that Eid is the day in which one has committed no sins. During Ramadhan we become familiar with the experience of the needy and poor who stay hungry not out of choice but because of lack of food. By fasting we appreciate the blessings bestowed upon us by Allah and become charitable towards those in need. As if to re-enforce the idea in our minds, Allah has made a wajib charity of Zakat ul Fitr at the end of Ramadhan.